Citigroup has settled a lawsuit by the US Federal Housing Finance Agency over the sale of home mortgage-backed securities to government-backed lenders, a court document showed Wednesday. According to the New York court filing, Judge Denise Cote said that both sides had reached an agreement that ends the lawsuit. The terms of the settlement were not disclosed. The FHFA sued Citigroup and 16 other financial institutions in September 2011 for violating federal securities laws in the sale of residential mortgage-backed securities to Fannie Mae and Freddie Mac. The agency is the conservator of the two mortgage-finance giants that were seized by the federal government in 2008 as they veered toward bankruptcy amid the collapse of a housing price bubble. The FHFA accused the 17 companies of misleading Fannie and Freddie about the credit-worthiness of the assets. In its complaint against Citigroup, the FHFA accused the New York-based bank of providing \"materially false\" information about the quality of $3.5 billion in residential mortgage-backed securities sold to Fannie Mae and Freddie Mac. A Citigroup spokeswoman declined to reveal the terms of the settlement, saying they were confidential. \"We are pleased to put the matter behind us,\" she said. The FHFA would not comment on the Citigroup settlement but said the agency \"remains active in settlement discussions with other parties that were subjects of these lawsuits.\" Separately, insurance giant Allstate Corp. on Wednesday dropped its lawsuit against Citigroup over the sale of securities backed by toxic pools of residential mortgages, according to a New York state court filing. Spokeswomen for both companies declined to discuss the issue. Allstate sued Citigroup and German bank Deutsche in February 2011, accusing them of fraud in the sale of residential mortgage-backed securities during the housing boom. Shares in Citigroup closed almost one percent higher at $52.28, while Allstate shares were flat at $48.55.