Citi Admits Role in Bad Mortgage Claims Settles for 1583M

first_imgCiti Admits Role in Bad Mortgage Claims, Settles for $158.3M February 15, 2012 458 Views in Government, Origination, Secondary Market, Servicing Acquisitions Agents & Brokers Attorneys & Title Companies Bank of America Citigroup Company News FHA Housing Affordability HUD Investors Lenders & Servicers Mortgage Fraud Mortgage Insurance Processing Service Providers 2012-02-15 Ryan Schuettecenter_img The mortgage subsidiary for “”Citigroup””:http://www.citigroup.com/citi/homepage/ settled claims that it misrepresented government-backed loans Wednesday by agreeing to pay HUD $158.3 million in damages.[IMAGE]The payout means that “”CitiMortgage””:https://www.citimortgage.com/Mortgage/Home.do acknowledges that it qualified nearly 30,000 bad loans for government insurance, a move that bilked the “”Federal Housing Administration””:http://www.hud.gov/offices/hsg/fhahistory.cfm (FHA) out of millions of dollars as more than 30 percent of the mortgages went into default.The settlement resolves a suit filed by the civil fraud unit at the office of the U.S. attorney for Manhattan.””For far too long, lenders treated HUD’s insurance of their mortgages like they were playing with house money. In fact, they were playing with other people’s money and other people’s homes,”” U.S. Attorney “”Preet Bharara””:http://www.justice.gov/usao/nys/ said in a statement.””We are pleased that, with today’s settlement, CitiMortgage has [COLUMN_BREAK]accepted responsibility for its conduct and agreed to pay damages in an amount that will significantly compensate HUD in this case for losses to the FHA insurance fund,”” he said.””Mark Rodgers””:http://www.linkedin.com/pub/mark-rodgers/40/307/757, a spokesperson for Citigroup, said in a statement that the financial institution felt “”pleased”” to settle the suit.””We take our quality assurance processes seriously and have pro-actively undertaken process improvements to ensure that they are as robust as possible,”” he added.The settlement marks the third civil fraud suit filed by Bharara’s civil fraud unit. Last summer it sued “”Deutsche Bank””:http://www.db.com/index_e.htm and Mortgageit, Inc. over $386 million in FHA insurance claims, followed by Allied Home Mortgage Corp. in November for $834 million in civil fraud cases.It also follows the unprecedented $25-billion mega-settlement from last week that secured concessions from mortgage servicers in exchange for immunity in certain cases.Last week “”Bank of America””:https://www.bankofamerica.com/ likewise chose to settle allegations of misrepresentation levied against the Countrywide Financial Corp. unit it acquired in 2008.Patrick Burns, a spokesperson with “”Taxpayers Against Fraud””:http://www.taf.org/, a nonprofit based in Washington, D.C., tells us he thinks the settlement is a “”good”” one.He says that he thinks there will be more cases and settlements to follow from banks.””Preet Bharara is going after fraudsters with a claw hammer,”” he adds. “”He’s a fairly tough customer and I think he’s done well.”” Sharelast_img read more