[EDITOR’S NOTE: This is another article on the arrogance of big banking and big bailouts! When will “Sid & Sally Citizen” get bailout assistance – Never!]
by Cora Currier, ProPublica
“Citigroup agreed (last week) to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi’s mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.
“The suit itself makes for good reading. We’ve pulled out the juiciest bits, and explain just what Citi appears to have been doing.
“Some background: The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners’ default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.
“Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making “substantial profits through the sale and/or securitization of FHA-backed insured mortgages” while “it wrongfully endorsed mortgages that were not eligible.”
“In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, “admits, acknowledges, and accepts responsibility” for passing on bad loans.
“The suit’s allegations
“Citi was passing on mortgages with particularly high rates of default to the FHA, costing taxpayers millions in insurance claims: