Citigroup settles MBS suit for $24.9 million
August 28 , 2012
Citigroup is to pay nearly $24.9 million to settle a lawsuit by investors who claimed they were misled over the quality of mortgage-backed securities bought just before the U.S. housing market crash.
According to court papers filed Monday in federal court, the 2008 lawsuit accused Citigroup of lying about lenders' deteriorating mortgage underwriting and appraisal standards during the subprime mortgage boom as well as understating the risk of default.
As underlying mortgages began to default, the value of the investments decreased.
The Ann Arbor Employees' Retirement System and Greater Kansas City Laborers Pension Fund led the lawsuit on behalf of investors who had purchased certificates in a mortgage-backed securities trust from Citigroup Mortgage Loan Trust in 2007.