In addition to participating in the $25 billion foreclosure settlement, Citigroup will pay $158 million to settle civil accusations that it defrauded the U.S. Department of Housing and Urban Development by falsely claiming that high risk mortgages qualified for federal insurance.
“Wednesday’s settlement resolves claims under the federal False Claims Act and concerned more than six years of misconduct, according to U.S. Attorney Preet Bharara in Manhattan. Citigroup “admits, acknowledges and accepts responsibility” for its conduct, he added, according to Reuters.
“The government accused Citigroup of falsely certifying to the U.S. Department of Housing and Urban Development that various risky mortgage loans it was making qualified for mortgage insurance.
“The case arose from a whistleblower complaint filed last year by Sherry Hunt, an employee at CitiMortgage in Missouri”
Hunt, according to Bloomberg News, said her “Citigroup Inc. quality-control team was still finding flaws in new loans that included altered tax forms, straw buyers and borrowers who listed fictitious employers.”
“Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed yesterday by the U.S. Attorney’s Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims, and admitted that it certified loans for FHA backing that didn’t qualify.”
“Hunt, who filed a sealed lawsuit against New York-based Citigroup in August that the government joined, will collect $31 million of that sum — before taxes and attorney’s fees — as a whistle-blower, she said in an interview yesterday. The settlement, which encompassed misconduct spanning 2004 to the present, indicates Citigroup has lingering problems in its O’Fallon, Missouri-based CitiMortgage unit.”
