Citigroup to settle MBS suit for $24.9 million
(Reuters) – Citigroup Inc has agreed to pay nearly $25 million to settle a lawsuit by investors who said they were misled about the quality of mortgage-backed securities they bought just before the U.S. housing market crashed, 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, and understating the risk of default. As the underlying mortgages began to default, the value of the investments plummeted, the lawsuit alleged.
The Ann Arbor Employees’ Retirement System and Greater Kansas City Laborers Pension Fund had led the lawsuit on behalf of investors who purchased certificates in one of two mortgage-backed securities trusts from Citigroup Mortgage Loan Trust Inc in 2007.