Citigroup pays $158 mn in US mortgage fraud pact

Citigroup Inc has agreed to pay $158.3 million to settle US civil claims that it defrauded the government over some home loans from its CitiMortgage unit.

Wednesday’s settlement resolves claims under the federal False Claims Act and concerned more than six years of misconduct, according to US Attorney Preet Bharara in Manhattan. Citigroup “admits, acknowledges and accepts responsibility” for its conduct, he added.

The government accused Citigroup of falsely certifying to the US 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.

Citigroup’s payout is separate from money the bank agreed to pay in connection with last week’s roughly $25 billion settlement between the government and five large mortgage servicers over alleged improper foreclosures.

Citigroup spokesman Mark Rodgers said the bank is pleased to resolve the latest case, and has already set aside enough money to cover the payout.

“We take our quality assurance processes seriously and have pro-actively undertaken process improvements to ensure that they are as robust as possible,” he said.

The settlement was approved by U.S. District Judge Victor Marrero in Manhattan, Bharara said.

Citigroup shares were up 1.3 percent at $44.56 on Wednesday afternoon.

Reuters