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CitiGroup to Pay $7B Over Mortgage Backed Securities Page 1 of 2
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Maura Healey
Home > News and Updates > Press Releases > 2014 > CitiGroup to Pay $7B Over Mortgage Backed Securities
MARTHA COAKLEY por immediate Release - July 14, 2014
ATTORNEY GENERAL
Media Contact
Brad Puffer
Jillian Fennimore
(617) 727-2543
CitiGroup to Pay $7 Billion in Federal-State Deal Over Mortgage
Backed Securities
Includes $45.7 Million Cash Payment to Commonwealth; Seventh Settlement in AG
Coakley's Investigation of Banks Involved in Securitizing Unfair Loans
BOSTON - CitiGroup, Inc. will pay $7 billion in a joint federal-state settlement over its mortgage-backed security activities.
Attorney General Martha Coakley announced today. This Is the seventh settlement resulting from AG Coakley's ongoing
investigation into the role of Wall Street investment banks in funding, purchasing and securitizing unfair residential
mortgage loans.
The Massachusetts Attomey General's Office, the Department of Justice (DOJ) and four other states entered into the
agreement today. As part of the $7 billion settlement, an expected $2.5 billion will be set aside for consumer relief such as
loan modifications, $500 million used to compensate Investors and other state relief, and $4 billion In civil penalties. Of the
$2.5 billion made available for consumer relief, $10 million will be made available for only Massachusetts borrowers, with
additional relief available as needed.
As part of this agreement, the Commonwealth will receive a direct cash payment of $45.7 million to settle the AG's own
investigation of CltiGroup's securitization practices, including around $6.5 million to the Pension Reserves Investment
Management Board (PRIM), more than $15 million In direct consumer relief, and the rest to the Commonwealth.
"Since 2009 our office has led the way in holding Wall Street securltizers accountable, and this cooperative federal-state
enforcement action uses that blueprint to recover billions across the country," AG Coakley said. This Is the seventh case
that Massachusetts has resolved around the securitization of unfair mortgage loans, providing significant relief to
homeowners and taxpayers in the Commonwealth."
The settlement is the result of lengthy Investigations by the Massachusetts AG's Office, the Department of Justice, and
other enforcers regarding unfair and deceptive practices committed by CitiGroup. The settlement also resolves the
separate state investigations by Massachusetts, Delaware, New York, Illinois, and California.
CitiGroup and its subsidiaries played a significant role In the securitization of residential home mortgages. Many of these
mortgages were subprime loans that were sold to consumers with cheap short term teaser rates. CitiGroup and its
subsidiaries bundled the loans into Investment pools and sold notes to investors backed by these unfair loans. Investors,
Including government investors, suffered significant losses when the market crashed and the nature of these mortgage
securitizations became clear.
The AG's Office was the first In the nation to Investigate and hold Wall Street securitization firms accountable for their role
in the subprime mortgage crisis. Today's settlement with CitiGroup is the most recent settlement resulting from the AG's
ongoing Investigation into the role of Wall Street Investment banks In funding, purchasing and securitizing unfair residential
mortgage loans. It follows the resolution of these other securitization cases:
• In May 2009, Goldman Sachs agrees to pay $60 million in relief for the Commonwealth and affected homeowners as
part of a settlement with the AG's Office.
• In June 2010, Morgan Stanley agrees to pay $102 million in relief for the Commonwealth and affected homeowners as
part of a settlement with the AG's Office.
• In November 2011, RBS agrees to pay $52 million In relief for the Commonwealth and affected homeowners pursuant
to a settlement with the AG's Office.
• In September 2013, Barclays Bank PLC agrees to pay $36 million to the Commonwealth and affected homeowners as
part of a settlement with the AG's Office.
• In November 2013, JPMorqan-Chase agrees to pay $34 million to the Commonwealth and affected homeowners as
part of a settlement with the AG's Office.
• In December 2013, Countrywide Securities Corporation makes $17.3 million payment to the state pension fund and the
Commonwealth as part of a settlement with the AG's Office.
AG Coakley's office has been a national leader In holding banks and Investment giants accountable for their role In the
economic crisis. In addition to recoveries Involving the securitization of loans, AG Coakley has also obtained settlements
with Countrywide. Fremont Investment and Loan. Option One and others on behalf of Massachusetts homeowners. In
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