Citigroup executives involved in the sale of subprime mortgage-backed securities are off the hook in the U.S. as authorities decided not to pursue any criminal charges against them. The acknowledgement came in a report issued by one of the agencies tasked with the Citigroup probe, the Federal Housing Finance Agency’s Office of Inspector General (FHFA OIG). The report marks the probe closed and outlines the investigation, the epicenter of which was Citibank’s sale and issuance practices with respect to subprime mortgage-backed securities in the 2006-2007 period.
No Criminal Charges against Citibank Executives for Pre-Crisis RMBS Sales
RBS May Have to Pay $ 13 Billion in Latest FHFA Lawsuit
Royal Bank of Scotland Group, PLC (“RBS”) may have to pay $ 13 billion in restitution to settle allegations in that it misled investors in mortgage-backed securities. The U.S. Federal Housing Finance Agency (“FHFA”) alleged, in a lawsuit filed on Monday in the U.S. District Court for the District of Connecticut, that RBS overstated the ability of borrowers to repay their mortgage loans by using false and misleading information. Philippe Selendy, a lawyer with Quinn Emanuel, estimated a $ 13 billion potential judgment against RBS based on a previous judgment against RBS in a similar lawsuit filed by the FHFA in the U.S. District Court for the Southern District of New York. (more…)
Justice Department Investigating Moody’s
After reaching a $1.38 billion settlement with Standard & Poor’s Ratings Services (S&P) for issuing favorable grades on mortgage deals leading to the 2008 economic crisis, the U.S. Department of Justice is now setting its sights on Moody’s.
S&P Considers Settlement with DOJ After Two Years of Legal Fighting
Following the collapse of the subprime mortgage market in 2008, which led to the worst financial crisis since the Great Depression, the government took serious measures against banks and financial institutions that – according to the government – caused the crisis with false and misrepresented risk measurements pertaining to subprime mortgages.
Innovative Lawsuit Targets U.S. Bank’s Government-Backed Mortgages
U.S. Bank, a division of U.S. Bancorp, is being sued in an Ohio federal court for failing to comply with the Federal Housing Administration (“FHA”) requirement that banks engage with borrowers in default. Advocates for Basic Legal Equity (“ABLE”), a legal aid group, filed the first-of-its-kind suit on behalf of the United States government.
HSBC’s $550 Million Dollar Mortgage Bond Settlement
After peaking in 2006, housing prices in the United States began to decline very swiftly – even more so than in the Great Depression. As prices fell 33 percent (they fell 31 percent during the Great Depression), homeowners realized that the value of their homes had become lower than their mortgage debt, and they lost their incentive to pay their mortgage balances. This led to foreclosures and short sales at unprecedented levels. Significantly, lost output—goods and services that we will never see—reached at least 40 percent of 2007 U.S. gross domestic product.
SunTrust Agrees to Mortgage Settlement with the Department of Justice
On Thursday, July 3, SunTrust agreed to pay $320 million in a settlement with the Department of Justice (“DOJ”) after an investigation of alleged violations of the Home Affordable Modification Program (“HAMP”). The settlement funds intend to provide relief to borrowers who were adversely affected by SunTrust’s actions; a prevention fund will also be established as a result of the settlement.