Tag Archives: Citigroup

A New York federal judge ruled Monday against the proposed $285 million settlement agreed to by Citigroup and the Securities and Exchange Commission (SEC) in October. Judge Jed Rakoff said he has ""regretfully"" concluded that the agreement is neither reasonable nor in the public interest. Rakoff's opposition is rooted in the lack of evidence needed to determine whether the settlement is sufficient and the fact that Citigroup did not admit fault. He has set a trial date of July 16 for the issue to be aired in public.

The National Credit Union Association (NCUA) has reached settlements with Citigroup and Deutsche Bank Securities regarding residential mortgage-backed securities sales to five wholesale credit unions that have recently failed. Citigroup agreed to pay $20.5 million, and Deutsche Bank agreed to pay $145 million to help lessen the losses incurred when the five credit unions failed. Neither bank admitted to fault when agreeing to the settlement. Total losses incurred from the five credit union failures stand at $3.3 billion, according to the NCUA.

U.S. District Judge Jed S. Rakoff criticized the Securities and Exchange Commission's (SEC) $285 million proposal to Citigroup to settle allegations related to its mortgage trading, and said he will need time to consider the deal. Rakoff questioned several of the settlement's terms, including the agreed-upon monetary penalty. Rakoff is particularly leery of this condition because the SEC has reportedly reached settlements with Citigroup in the past after which the bank allegedly broke the agreements through security law violations.

State attorneys general and the nation's five largest mortgage servicers could be within weeks of reaching a $25 billion agreement to settle allegations that foreclosures were improperly processed. Details of the settlement terms obtained by DSNews.com indicate that individual servicer penalties will be based on the number of foreclosures they've completed. Collectively, $5 billion would come in the form of cash fines and $20 billion would be satisfied with principal-reducing modifications and refinancing for underwater borrowers.

The industry's four largest mortgage servicers all say they will be taking part in the revamped Home Affordable Refinance Program (HARP). Bank of America, Chase, Citigroup, and Wells Fargo have each expressed their support of the program and the changes that will allow more underwater homeowners to refinance. Government officials expect the program's revisions to expand its reach and increase competition for mortgage refinancing, with an estimated 1 million homeowners to receive assistance under the new guidelines.

Citigroup has agreed to a $285 million settlement with the Securities and Exchange Commission (SEC) after accusations that it misled investors about a collateralized debt obligation (CDO) that defaulted after the housing market began showing signs of distress. The SEC alleges that a Citigroup subsidiary selected $500 million of the $1 billion CDO portfolio and then took a proprietary short position against the investments. But Citi says while the company did subsequently realize gains on its short positions, other affiliates also retained over $100 million of the notes issued and ultimately sustained losses.

HUD's Office of Inspector General (OIG) alleges CitiMortgage, Inc. has violated the Federal Housing Administration's (FHA) Preforeclosure Sale Program by submitting improper claims for short sales. After examining 68 FHA claims, the inspector general found 63 claims for loans it says Citi did not properly review to verify that the borrowers were in default or in imminent danger of default. Citi ""respectfully disagrees"" in its written response.

Help for underwater homeowners has moved from principal writedowns to refinancing in the settlement negotiations between state attorneys general and the nation's five largest mortgage servicers. According to a widely circulated report, the proposal made its way into the talks last week. Borrowers who are current on their mortgage payments but owe more than their home is worth would be able to refinance at today's lower rates. The main caveat is that the loan must be owned, not just serviced, by one of the five banks.

Citigroup reported Monday that it brought in net income of $3.8 billion during the third quarter of this year. That's up 74 percent from a year earlier. Third quarter revenues increased, thanks to a $1.9 billion accounting adjustment that allowed Citi to record a gain based on the risk associated with its credit holdings. The company said in its earnings presentation to investors that it remains highly focused on risk management, particularly as it relates to U.S. mortgage exposure.

Amid a challenging environment for servicers, CitiMortgage, GMAC, and Ocwen have outperformed major competitors with regards to loss mitigation and foreclosure timelines, according to a recent report from Moody's Investors Service. The company's Servicer Dashboard rates major servicers on their performance from June 2010 to June 2011. Moody's notes that Bank of America's and Chase's performance assessments were affected by large servicing acquisitions and foreclosure moratoria.