Costly start to a new year for Citigroup
Feb
17
Written by:
17/02/2012 17:20
Group hit with massive fine
Citigroup has agreed to pay $158.3 million to settle U.S civil claims that it defrauded the government into insuring thousands of risky home loans made by its CitiMortgage unit.
The settlement resolves claims under the federal False Claims Act and arose from a 'whistleblower' lawsuit brought by Sherry Hunt, a CitiMortgage employee in Missouri. According to settlement papers filed in US District Court in New York, in February 2012, CitiMortgage admitted, acknowledged, and accepted responsibility for misleading the government into insuring risky home loads.
The US Government accused Citigroup of falsely certifying that many of its loans that then qualified for insurance from the federal Housing Agency, part of the US Department for Housing and Urban Development.
Investigators stated that the misconduct lasted for more than six years. In total 9,636, or more than 30 percent, of nearly 30,000 Housing and Urban Development- insured mortgage loans that CitiMortgage made or under wrote since 2004 had defaulted, costing the Department for Housing and Urban Development nearly $200 million in insurance claims.
The settlement comes days after Citigroup was ordered to pay as much as $2.22 billion of a $25 billion U.S settlement due to its part in the alleged foreclosure abuses.
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