Citigroup Inc. has reached a settlement with federal and state officials that will resolve an investigation into its mortgage securities activities.
The New York-based financial services conglomerate disclosed Monday an agreement to resolve an investigation by the Residential Mortgage-Backed Securities Working Group.
Citi said that the settlement is tied to residential mortgage-backed securities and collateralized-debt obligations that it issued, structured or underwrote between 2003 and 2008.
Citigroup Chief Executive Officer Michael Corbat noted in the announcement that the settlement resolves all pending civil investigations into its legacy mortgage securities activity.
“We also have now resolved substantially all of our legacy RMBS and CDO litigation,” Corbat stated. “We believe that this settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past.”
The settlement resolves actual and potential claims by the U.S. Department of Justice, the Federal Deposit Insurance Corp. and several state attorneys general.
Citi said that the amount of the settlement is $7.0 billion, including $4.5 billion in cash and $2.5 billion in consumer relief.
The Justice Department will receive $4.0 billion of the cash as a civil monetary payment, and the other $0.5 billion will be paid as compensation to the FDIC and the state attorneys general.
As part of the consumer relief, which will be completed by 2018, Citi will provide financing for the construction and preservation of affordable multifamily rental housing. The rest will in the form of principal reduction and forbearance on residential loans along with other direct consumer benefits from various relief programs.
Citi said it will take a $3.8 billion, second-quarter charge.
A Department of Justice spokesperson was unable to immediately respond to Mortgage Daily’s request for a statement.
