15 February 2012 – Bank Admits and Accepts Responsibility for Failing to Comply with Certain HUD-Related Loan Requirements and Other Conduct and Agrees to Pay U.S. $158.3 Million
Preet Bharara, the United States Attorney for the Southern District of New York, Helen Kanovsky, General Counsel of the U.S. Department of Housing and Urban Development (“HUD”), and David A. Montoya, the Inspector General of HUD, announced today that the United States has filed, and simultaneously settled, a civil fraud lawsuit against CITIMORTGAGE, INC. (“CITIMORTGAGE”), a subsidiary of CITIBANK, N.A. The Government’s Complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) for over six years of misconduct in connection with CITIMORTGAGE’s participation in the Federal Housing Administration (“FHA”) Direct Endorsement Lender Program.
In the settlement, CITIMORTGAGE “admits, acknowledges, and accepts responsibility” for certain conduct alleged in the Complaint including, “[failing] to comply fully with all HUD-FHA requirements with respect to certain loans,” and “[submitting] to HUD-FHA certifications stating that certain loans were eligible for FHA mortgage insurance when in fact they were not.” CITIMORTGAGE also admitted that, as a result of its conduct, HUD incurred losses when certain loans that should never have been endorsed defaulted and agreed to pay $158.3 million to the United States in damages under the False Claims Act. The settlement was approved today by United States District Judge Victor Marrero.