The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Attorney’s Office, Southern District of New York, in conducting a review of CitiMortgage, Inc. CitiMortgage is a direct subsidiary of Citibank, N.A., and Citibank is an indirect subsidiary of Citigroup. CitiMortgage is based in O’Fallon, MO. The review began due to a qui tam filing in the U.S. District Court for the Southern District of New York.
CitiMortgage has participated in the Federal Housing Administration (FHA) direct endorsement lender program since 1981. The direct endorsement lender program authorizes private-sector mortgage lenders to approve mortgage loans for insurance by FHA. Lenders approved for the program must follow various HUD-FHA requirements and provide annual and per loan certifications that the lender complies with these requirements when underwriting and approving loans for FHA insurance.
In 2011, the qui tam relator filed a complaint alleging, among other things, that CitiMortgage, Citibank, and Citigroup violated the False Claims Act, 31 U.S.C. (United States Code) 3729 et seq., in connection with CitiMortgage’s participating in the direct endorsement lender program. The complaint alleged that CitiMortgage, Citibank, and Citigroup caused the United States or its departments or agents to insure mortgages originated by these entities, based on the entities’ false statements that these loans were consistent with applicable regulations and rules regarding the quality of the mortgages or loans. On or about February 13, 2012, the U.S. Attorney’s Office intervened (joined the relator’s case on behalf of HUD) in the civil action against these entities. On February 15, 2012, CitiMortgage, Citibank, and Citigroup agreed to settle the complaint by paying the Federal Government and relator $158.3 million. The settlement payment included the portion payable to the U.S. Department of Justice and the relator for bringing the lawsuit, and the remainder of the more than $122.8 million was paid to the FHA insurance fund.