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02-15-2012, 07:53 PM #1
Citigroup to Pay $158 Million In Mortgage Fraud Settlement
Citigroup to Pay $158 Million In Mortgage Fraud Settlement
By THE ASSOCIATED PRESS
Published: February 15, 2012
Citigroup has agreed to pay $158.3 million to settle claims that its mortgage unit fraudulently misled the government into insuring risky mortgage loans for over six years.
The government said Wednesday that CitiMortgage had certified 30,000 mortgages for insurance provided by the Federal Housing Administration and submitted many certifications that were “knowingly or recklessly false.”
More than a third of those mortgage loans went into default, resulting in millions of dollars in losses for the government because of the insurance claims.
Preet Bharara, the United States attorney in Manhattan, said lenders for too long viewed “insurance of their mortgages like they were playing with house money.”
As part of the civil fraud settlement, Citi accepted responsibility for failing to comply with government requirements and submitting certifications that were fraudulent.
The payments are in addition to the $2.2 billion Citigroup has to pay in connection with the $26 billion mortgage loan settlement announced last week by the Justice Department and the nation’s top mortgage lenders.
Since 2004, more than 30 percent of loans originated or underwritten by CitiMortgage have gone into default. The Department of Housing and Urban Development said that CitiMortgage’s default rate soared to over 47 percent on loans originated in 2006 and 2007, resulting in foreclosures, evictions, and depressed real estate values, all to the detriment of the national housing market and the national economy.
CitiMortgage submitted certifications to the government that stated that certain loans were eligible for federal mortgage insurance when they were not, according to the government. The defaulted loans resulted in millions of dollars in insurance claims.
Citi said in a statement that the company would not take an additional charge related to the settlement. The bank also said that the government-related business was important and that it would continue to participate in the government’s loan and insurance programs.
http://www.nytimes.com/2012/02/16/bu...ettlement.htmlLast edited by JohnDoe2; 02-15-2012 at 07:58 PM.
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