The insurances were provided by the Federal Housing Administration that had to suffer millions of dollars in losses for settling insurance claims as more than a third of the mortgage loans went into default. Citigroup has accepted responsibility for not complying with government regulations and for submitting fraudulent certifications, as part of its settlement with the government. The payment of $158.3 million is in addition to $2.2 billion that Citigroup has agreed to pay as its share of the $26 billion mortgage loan settlement, that was reached between the Justice Department and the top mortgage lenders last week.

 

The Department of Housing and Urban Development said that more than 30 percent of the loans originated or underwritten by CitiMortgage have defaulted and that its default rate jumped over 47 percent on loans that originated in 2006 and 2007. These defaults led to foreclosures, evictions and lowering of real estate values, depressing the national housing market and the national economy. The government also alleged that CitiMortgage submitted fraudulent certifications, stating that certain loans were eligible for insurance when they were not, leading to a loss of millions of dollars in insurance claims.