Citigroup to Pay $158M in Whistleblower Fraud Claim Over Insurance for Mortgages

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Citigroup pays zero net! Why? Because taxpayers bailed out Citi and continues to bail them out with near zero interest rates, mark to fantasy accounting & special Fed programs that Citi and the rest of the banks that own our government utilize every day. Of course no one ever goes to jail for this fraud because both political parties rely on these banks for campaign contributions. This payment is just a cost of doing business for Citi which they pass on to their customers via higher fees or near zero returns on savings.

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…totaling more than $4.8 billion in underlying principal obligations. Of those loans, 9,636 (or more than 30% percent) have defaulted. Citi’s default rate soared to more than 47% for loans originated in 2006 and 2007. In other words, nearly every other loan Citi endorsed for FHA insurance in the critical years leading up to the financial crisis defaulted, resulting in foreclosures and evictions and ultimately depressed real estate values, all to the detriment of the national housing market and the national economy.  Moreover, of the loans Citi originated in 2007, over 10.5% went into early payment default. HUD has already paid nearly $200 million in insurance claims on loans that Citi originated or underwrote since 2004. A substantial percentage of those claims resulted from loans that were ineligible for FHA insurance and never should have been insured. Thousands of other loans are currently in default, which the Government expects to result in additional insurance claims paid by HUD in the future.
7. While Citi made substantial profits through the sale and/or securitization of FHAinsured mortgages, it wrongfully endorsed mortgages that were not eligible for FHA insurance under HUD rules. Notwithstanding the mortgages’ ineligibility, Citi endorsed the mortgages for FHA insurance by falsely certifying that they complied with HUD requirements and that its underwriters had conducted any necessary due diligence required by HUD rules.