What the Citigroup Settlement Means for the Home Owners Affected
Citigroup, one of the big banks accused of selling bad mortgage securities that led to the massive 2008 financial crisis has finally reached a settlement with the US Justice Department. After months of investigations, testimonies and negotiations, Citigroup agreed to pay a $7 billion settlement, this is including a record penalty amount of $4 billion to the Justice Department. The settlement amount is roughly half of the Citigroup’s $13 billion profits from last year.
So What Did Citigroup Do?
According to the investigations and admittance by Citigroup Bank, they grossly mislead both investors and the American public into believing that the mortgage-backed securities they were selling were in compliance with the law and guidelines pertaining to correct underwriting guidelines. They were not.
So Where Will This $7 Billion Go?
The big bank will pay out $7 billion for what they did. Below is a breakdown of where this money will go:
US Justice Department will receive $4 billion in a fine payment. This is the largest penalty that has ever been issued under Federal Law.
Consumer Aid Programs will receive $2.5 billion. Consumer Aid programs include principal reductions and various relief options for the homeowners and communities affected. Citigroup has also pledged to provide funding to legal aid programs.
$500 million will be given to the FDIC and five states; California, Delaware, Illinois, Massachusetts and New York.
Of the $500 million awarded, California will be receiving $192 million. $90 million of this will go towards consumer relief programs such as loan forgiveness, interest rate reductions, and financing for affordable rental housing.
California will then take the remaining $102.7 million and divide this between the two large employee pension funds in California, CalPERS and CalSTRS. This will compensate for losses they endured by purchases from Citigroup.
Who is Entitled to Compensation?
Consumers that were directly affected by the deceptive practices, specifically Homeowners struggling to make payments are most likely. Citigroup has agreed to contact those eligible, but some news sources are advising consumers to be proactive and contact Citigroup for further information. Please note that all relief is intended for those with mortgages made or serviced by Citigroup.
Investigations Will Continue
Talks are still in the works between the US Justice Department and the nations second largest bank, Bank of America, in pursing similar or possibly larger settlement amounts for those affected.
There are many individuals that feel that the Justice Department and the special task force that was designed to investigate these crimes in 2012, is still not enough. The massive loss suffered in part by these deceptive banking practices have impacted thousands of home owners. Some of which are still suffering from the repercussions today.
To date the specially designated task force, the Financial Fraud Enforcement Task Force, has recovered $20 billion so far for consumers and investors in the US. Investigations will continue with several other banking companies.
Mortgage Lending Real Estate Knowledge Base
Questions about buying or selling your existing home?
TMortgage Loans Colorado Madison WI, Denver CO, St Louis MO | (970) 585-4546 | Mortgage Calculator Options with Loan Quotes. Get Started Now With LF Loans Mortgage! Lock Your Rate - Calculate Payments - Compare Loans - Skip the Bank - Types: FHA Loans, HARP, VA Loans, ARM | Boulder, Ft Collins, Aspen, Pagosa Springs, Colorado Springs, Pueblo, Golden, Grand Junction, Steamboat Springs, Denver CO, Hannibal, Springfield, Troy, O'Fallon, St Louis MO, Chicago, Quincy IL | Home Loans in Armenia WI, Baraboo WI, Beaver Dam WI, Beloit WI, Brooklyn WI, Columbus WI, Deforest WI, Dell Prairie WI, Dodgeville WI, Edgerton WI, Fitchburg WI, Fort Atkinson WI, Germantown WI, Green Bay WI, Green Lake WI, Janesville WI, Lacrosse WI, La Valle WI, Lake Delton WI, Lake Mills WI, Lodi WI, Madison WI, Mauston WI, Mazomanie WI, Merrimac WI, Middleton WI, Milton WI, Milwaukee WI Monroe WI, Montello WI, Mount Horeb WI, Necedah WI, Oregon WI, Platteville WI, Portage WI, Prairie Du Chien WI, Princeton WI, Reedsburg WI, Ripon WI, Rome WI, Spring Green WI, Stoughton WI, Sun Prairie WI, Tomah WI, Verona WI, Watertown WI, Waunakee WI, Windsor WI
Questions about Lendem Financial mortgage loan options? Why you should think about using a mortgage broker vs a bank? Using a Mortgage Loan Officer that has access to all sources of lending institutiuons helps people get the best loan for their situation and offers all options on the market vs the programs at one bank. Call Todd Rubick of Lendem Financial and tell him why the bank said no... If your tax returns do not show your true income, or credit is less than perfect... Full service all source lending strategies will be offered for those that need them.