CitiMortgage Bad Loans
- CitiMortgage settled with $158 for Fraudulent Loans.
- CitiMortgage's bad loans defaulted in FHA Direct Endorsed Lender program.
- You can expect for a slower process in getting your loan approved and getting your loan funded.
CitiMortgage Sued for Bad Loans and Settles with FHA for $158 million
CitiMortgage has agreed to pay $158 million in fines to the US government to settle a lawsuit filed by the Dept. of Housing and Urban Development for fraudulent underwriting practices on Federal Housing Administration (FHA) loans.
CitiMortgage is one of the largest lenders that is an FHA Direct Endorsed (DE) lender. Since 2004 CitiMortgage originated more than 30,000 FHA loans, with more than 30% going into default. Of the FHA loans given out by CitiMortgage in 2006-2007, 47% ended up in default.
Bad Loans - What Happened?
The FHA insures loans and relies on the DE lenders to oversee that underwriting standards are followed. CitiMortgage and the other DE lenders can automatically get government insurance through the FHA. The FHA counts on the DE lenders to thoroughly examine all mortgage loan documents, and follow the strictest underwriting considerations. The DE lender must carefully evaluate the riskiness of loans and report any problems. CitiMortgage, as a DE Lender, is expected to weed out bad loans.
The US Dept. of Housing and Urban Development (or HUD, which oversees the FHA) issued a press release about the settlement. In it, U.S. Atty. Preet Bharara said, "For far too long, lenders treated HUD's insurance of their mortgages like they were playing with house money. In fact, they were playing with other people's money and other people's homes."
CitiMortgage, along with other lenders, misused the system, and allowed bad loans to pass through the underwriting and review system. This is the third lawsuit by the US Attorney's Civil Fraud Unit, the other two against Deutsche Bank and Allied Home Mortgage Corp.
How does CitiMortgage's Settlement Affect Me?
Paying such a large fine means that CitiMortgage and other DE lenders will adhere more closely to the rule book. Lenders, like CitiMortgage, will process their loans more carefully, with the effect on you being a longer time to get a loan approved, and a longer time to fund a loan.
This will be inconvenient for you, as a borrower. However, if lenders pay more careful attention to the lending guidelines and stop abusing the process, then there will be a more stable lending environment, as well as a more stable housing environment.
It is important that you prepare yourself to get the best loan possible. Bills.com offers many articles and tools to help you make the best decision about buying a home, taking a mortgage, and refinancing.
Get a Rate Quote
- Home Loan Mortgage Refinancing or Home Equity Loan?
- Home Equity Loan vs. Home Equity Line of Credit
- No Cost Mortgage Refinance
- Second Mortgage Loan
- Housing Recovery and the FHA Bailout
- Refinance Second Mortgage - Rates, Loans and 2nd Refi Tips
- Refinancing Your Home Equity Line of Credit
- Shopping for a Mortgage Tips –Get the Best Mortgage Terms
- Mortgage Tips - Getting an Affordable Mortgage
- Conventional vs FHA Loan
- Buy a Home with an FHA loan
- Bank of America Refinance
- Debt Consolidation
- Refinance My Home
- US Bank No Closing Cost Refinance
- Debt Relief
- Fifth Third Bank Mortgage
- Washington Mutual
- Government Debt Relief
- US Bank Home Mortgage
- HSBC Mortgage
- Bank of America Mortgage
- Debt to Income Ratio
- Credit Counseling
- Chase Mortgage
- US Bank No-Closing-Cost Refinance
- Help with mortgage payments
- Bank of America Refinance
- Should I Take a Fixed Rate or Adjustable Rate Mortgage
- Gifting Money for Downpayment
- Appraisal LTV & HELOC
- Second Mortgage Lender | Shop Around
- home equity consolidation loan fees
- Fannie Mae DU Refi Plus for Harp Refinancing
- Mortgage Underwriting
- Buffalo Bills
- Deed in Lieu or Short Sale?
- Paying Off Mortgage
- Mortgage, Note, Deed, & Title
- Bank of America Mortgage Payment and Acknowledgment
- LTV and Refinance Rate
- Refinance with LTV Greater Than 100%
- Negotiate Mortgage Settlement
- Home Sale or Refinance
- State Stops House Sale
- Can a bank cancel my HELOC
- Adding a Spouse to a Mortgage
- Refinance Three Mortgages
- Spouse Not On Mortgage
- Refinance VA Loan
Search answers to other readers' questions, or ask your own and get a personal answer!
Learn how much you can save over time by cutting back on your daily latte or other small expenses that add up!
Consolidation? Credit counseling? Debt settlement? Bankruptcy? New loans? Debt Coach, a free online tool, gives tailored advice to help you find the right solution for your needs.
Use our Debt Consolidation Calculator to learn how much your loans actually cost, and to find solutions to save money!
How savvy are you about your personal finances? Take this quick quiz to learn insights into your finance habits and your Bills IQ.
Deciding if a mortgage refinance loan is right for you? Our calculators make it easy. Plug a few key facts about your old loan into our calculator, and learn if a refinance makes sense for you.
See today's national averages for adjustable and fixed-rate mortgages. Then drill-down to learn what is the best rate for you!
Learn what your fellow Bills.com readers think about financial solutions providers and mortgage lenders. We want you to share your experiences, too!
If you want to dive deep into your debt relief options, including the costs of each solution, read these whitepapers. Includes references, so you can follow-up on each fact cited.
Bills.com experts explain, in fast-paced videos, the basics of refinance, debt relief, student loans, and more.
Tool Box Easy to use resources to help you find solutions to your money questions