California Real Estate Fraud Report

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CitiMortgage Settles New York AG, Whistleblower Lawsuit Quickly

Coming just a week after it was part of a settlement with most of the nation’s attorneys general, CitiMortgage, Inc., a subsidiary of Citibank, N.A., has settled a second lawsuit.

This new settlement was the outcome of a private lawsuit filed last year by a whistleblower, which the U.S. Attorney in Manhattan joined. The settlement, which was filed and settled on the same day this week (Wednesday), requires CitiMortgage to cough up an additional $158.3 million to what it has agreed to pay under the nationwide settlement. In this case, the U.S. AG (and the whistleblower) had claimed that CitiMortgage had made risky loans it never should originated that caused the U.S. Housing and Urban Department (HUD) via the FHA, to suffer great losses.

What was unique and (to me) surprising was that in this case, CitiMortgage  “admits, acknowledges, and accepts responsibility” for the conduct outlined in the complaint against it, including extending loans it knew would not be eligible for the FHA’s mortgage insurance and yet certifying that they were. Usually the banks will settle without admitting any responsibility. Wow.

Most disturbing were the admissions that CitiMortgage‘s business units, as part of their routine business practices, were ordered to apply “brute force” on the firm’s quality control personnel in order to eliminate findings of defects in the risky loans and the underwriting practices that made those loans possible.

This is a quote from Manhattan U.S. Attorney Preet Bharara:  “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.  CITIMORTGAGE is the latest in a series of cases this office has filed against lenders who flouted HUD requirements for making government-backed loans.   We are pleased that, with today’s settlement, CITIMORTGAGE has 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.” 

As a sidebar, since 2004, at least 30% of the loans that were either originated or underwritten by CitiMortgage have gone into default.

Read the original article in Mortgage News Daily

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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