Citigroup, Inc. this week agreed to settle a civil fraud lawsuit with the Manhattan U.S. Attorney’s Office and the Department of Housing and Urban Development alleging reckless mortgage lending practices. The $158.3 million settlement was reached on Feb. 15, hours after Preet Bharara, the U.S. Attorney for the Southern District of New York, filed a civil fraud lawsuit against CitiMortgage, a subsidiary of Citibank. The suit sought treble damages and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act, a federal Civil War-era statute Congress passed to ...

While the multistate servicing settlement reached by 49 states, federal officials and the nation’s five largest servicers gets the state and federal attorneys off the banks’ backs in regards to servicing and foreclosure, the banks are still wide open to servicing lawsuits from individuals, criminal charges and litigation over their securitization activities. “This is only one part of a long resolution process,” said Richard Andreano, practice leader of Ballard Spahr’s mortgage banking group. Despite complaints from a wide swath of consumer protection groups that the $25 billion in penalties to be...

The five large mortgage servicers that agreed to a $25 billion settlement with 49 state attorneys general this week have already established more than enough reserves to cover their costs, analysts say. Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial agreed to pay $20.0 billion in financial relief to homeowners and $5.0 billion to federal and state governments, of which $1.5 billion will be used to compensate some borrowers who have gone through foreclosure. Both the Federal Reserve Board and the Office of the Comptroller of the Currency levied separate monetary penalties...

The boom in mortgage origination activity in the fourth quarter of 2011 carried mortgage banking profits to their highest level in nearly two years, according to a new Inside Mortgage Trends analysis of earnings reports from 22 companies. The group, which includes all the top originators and servicers, reported a combined $5.10 billion in mortgage banking income during the fourth quarter of 2011. That was up 20.0 percent from the previous three-month period and represented the most profitable quarter for the group since the first quarter of 2010. On a full-year basis, the results don’t...(Includes one data chart)

The mortgage settlement agreement between state and federal law enforcement agencies and the country’s five largest loan servicers will unleash a new foreclosure wave that will cause real estate-owned properties and distressed home sales to increase, according to market observers. Having the Federal Housing Finance Agency’s REO Initiative ready will be useful when the foreclosure and REO tsunami comes rolling in, academics, economists and analysts agree. The number of properties classified by banks as “real estate-owned,” or REO, has declined over the past year. The reason: the robosigning scandals...

Firms participating in the Public-Private Investment Program with a focus on non-agency mortgage-backed securities all took losses in the fourth quarter of 2011 compared with the previous quarter, according to an analysis by Inside Nonconforming Markets. The Oaktree PPIP Fund – which only invests in commercial MBS – was the only public-private investment fund to increase its net internal rate of return since inception in the fourth quarter of 2011, Treasury Department data show. The Treasury cautioned that it is ... [Includes one data chart]

Wells Fargo reclaimed the top ranking in residential mortgage servicing at the end of 2011, a position that the firm last held back in 2006. A new Inside Mortgage Finance ranking and analysis shows that Wells continued to build its mortgage servicing portfolio through robust loan origination activity, but it wasn’t easy. Wells originated $120.5 billion in new loans during the fourth quarter, but managed to increase its servicing portfolio by just $7.5 billion, a 0.4 percent increase. That relatively small increase was enough to move well ahead of Bank of America, which reported a huge $165.8 billion net...

The Federal Home Loan Bank of Chicago is in the midst of crafting an “unusual” plan to supplement the Bank’s current affordable housing and community investment programs with $50 million in additional funds to be used to promote housing and economic development throughout its district.According to a filing the Chicago Bank made with the Securities and Exchange Commission late last month, the three-year initiative will be in addition to the Bank’s current Affordable Housing Program (AHP) grant process and is part of an agreement with the FHLBank regulator, the Federal Housing Finance Agency.“We are in the process of developing the framework for the use of these funds which will be deployed by the end of 2014,” explained the Bank in its Dec. 27 SEC filing. “This program will be in addition to our other community investment programs in 2012, 2013 and 2014.”

The Federal Home Loan Bank of Cincinnati last week announced a changing of the guard among top management as the Bank’s president and CEO will step down this summer to retire.David Hehman will step down effective June 1 after 35 years at the Bank, including nine years as its president and CEO. Hehman, 63, is credited with leading the FHLBank of Cincinnati through the 2008 financial crisis when banks of all sizes were forced to turn to the Cincinnati FHLBank for liquidity.The FHLBank’s board appointed Andrew Howell to replace Hehman. Howell joined the FHLBank of Cincinnati in 1989 and is currently its executive vice president and chief operating officer.

In what may be a harbinger for other nonbank mortgage lenders fighting to make their way in a tough and competitive market, Primary Residential Mortgage, Inc. has launched an enterprise risk management (ERM) group, a step taken to make sure the company has in place the risk-monitoring and evaluation policies to properly manage risk through the entire loan origination process. “Over the last couple years, the mortgage industry has been under intense scrutiny,” said Dave Zitting, president and CEO of PRMI, a nationwide mortgage banking company based in Salt Lake City. “While the larger banks all have...