According to Reuters (5/28/13), the lawsuit claimed Citigroup made false statements that misled Fannie Mae and Freddie Mac into buying mortgage-backed securities to the tune of approximately $3.5 billion. Of 18 securities fraud lawsuits filed against banks in 2011, this is the second to be settled. Combined, the lawsuits represent more than $200 billion in mortgage-backed securities.
Meanwhile, Citigroup and Allstate settled a separate lawsuit filed by Allstate against Citigroup, also involving mortgage-backed securities. Bloomberg (5/29/13) reports Allstate alleged in its lawsuit that it bought approximately $200 million in mortgage-backed securities from Citigroup based on fraudulent statements from Citigroup.
The Citigroup FHFA lawsuit is Federal Housing Finance Agency v. Citigroup Inc., et al, U.S. District Court, Southern District of New York, No. 11-06196. The Citigroup Allstate lawsuit is Allstate Insurance Co. v. Citimortgage Inc., 650432/2011, New York State Supreme Court, New York County (Manhattan).
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The SEC had reportedly been hesitant to force an admission of guilt because defendants might be less likely to settle, drawing out the litigation process and delaying the time it would take to compensate investors. Two years ago, however, a judge threw out a $285 million settlement between the SEC and Citigroup, noting that because of the “neither admit nor deny” language, he could not tell if the $285 million was a fair settlement.
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Silvia Castellanos
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I had a total of three loans in this property.