Tag Archives: subprime

Citigroup (C) to Sell Subprime Lending Unit in Canada

Citigroup Inc. (CFree Report) entered into an agreement to sell CitiFinancial, its subprime lending unit in Canada, to an investor group led by private investment firm, JC Flowers and Värde Partners.

This is part of Citigroup’s strategy to emphasize on growth in core businesses through restructuring, expense management and streamlining operations internationally.

The divestiture is subject to regulatory approvals and is anticipated to close in the first half of 2017. While the amount for the sale remained undisclosed, this transaction is not likely to affect Citi’s financials.

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Nine executives had been recommended for 2008 mortgage meltdown criminal probe by FCIC

Former Treasury Secretary and Citibank Chair Bob Rubin was cited by a special congressional panel as someone who should have been the subject of a criminal investigation for activities related to the 2008 subprime mortgage meltdown.

The Financial Crisis Inquiry Commission (FCIC) had told the Justice Department that it should open an investigation of Rubin, Treasury Secretary under President Bill Clinton, for alleged securities fraud perpetrated as a member of Citibank’s board.

Rubin was among nine executives recommended for a criminal probe by the FCIC that were cited in a letter sent Thursday from Sen. Elizabeth Warren (D-Mass.) to Justice Department Inspector General Michael Horowitz.

Warren asked the department auditor this week to look into why zero criminal inquiries were launched as a result of the FCIC recommendations, which were publicly disclosed for the first time earlier this year.

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Former Fannie Mae CEO reaches final $100,000 subprime mortgage settlement

The final chapter in the government-sponsored enterprise executive financial crisis saga is over, once again following the same pattern of the previous accounts.

Former Fannie Mae CEO Daniel Mudd announced in a filing on Monday that he reached a settlement with the U.S. Securities and Exchange Commission for $100,000 over his role in the run-up to the financial crisis as the head of one of the mortgage funding giants, an article in Reuters by Patrick Rucker and Nate Raymond stated.

According to the article, Mudd was the last of six executives at mortgage funding giants Fannie Mae and Freddie Mac sued by the SEC in 2011 to reach a settlement.

From the article:

Like Mudd, the other five defendants reached relatively small settlements, none exceeding $250,000, despite facing SEC suits in what were among its biggest cases to arise from the financial crisis and mortgage meltdown.

Under the settlement, the court papers said Mudd would contribute or cause to contribute $100,000 to an account with the U.S. Treasury Department. The settlement leaves open who will pay the amount.

The article noted that Mudd did not admit to wrongdoing in settling.

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Former Subprime Lender NovaStar Files for Bankruptcy

Bizjournals:

The subprime lending roots of Kansas City-based Novation Cos. Inc. (OTC: NOVC) finally have caught up to the company, playing a role in its recent decision to file for Chapter 11 bankruptcy protection.

Novation is the successor company to NovaStar Financial Inc., a major subprime lender during the housing bubble that at one time originated more than $11 billion in mortgage loans a year.

Deutsche Bank : must face U.S. lawsuit over subprime disclosures

4Traders:

A U.S. judge on Monday said Deutsche Bank AG must face part of a lawsuit claiming it defrauded investors who bought $5.4 billion of preferred securities by concealing its exposure to the fast-deteriorating subprime mortgage market.

U.S. District Judge Deborah Batts in Manhattan said the plaintiffs may pursue claims with respect to offerings in November 2007 and February 2008, but not with respect to offerings in May 2007, July 2007 and May 2008.

Freddie Mac must face revived lawsuit over risk disclosures

4Traders:

A federal appeals court on Wednesday revived a lawsuit accusing Freddie Mac and several former top officials of defrauding shareholders by concealing its subprime mortgage exposure and its inadequate risk management prior to the 2008 financial crisis.

The 6th U.S. Circuit Court of Appeals said a lower court judge erred in concluding that the Ohio Public Employees Retirement System did not sufficiently allege that its losses were caused by Freddie Mac’s disclosure shortfalls.

Breaking news: Countrywide’s Mozilo reportedly off the hook for all those subprime mortgages

Oh, wow! Crime does pay! A big slap in the face to Countrywide whistleblower, Michael Winston. Unbelievable!!!

One of most notorious people at the center of the housing crisis is reportedly off the hook for any supposed malfeasance, as Bloomberg is reporting that the Department of Justice is abandoning its attempt to sue Angelo Mozilo, the founder ofCountrywide, for his company’s lending practices in the run-up to the housing crisis.

Countrywide originated more mortgages in this country from 2004 to 2007 than any other lender. During that time, Countrywide closed so many subprime mortgages it remained a top-5 producer for that home loan product. The same goes for other loans, such as Alt-A.

The DOJ first began seeking a civil suit against Mozilo two years ago, after the statute of limitations expired for any criminal charges that could have been filed against Countrywide’s founder.

Mozilo long held that Countrywide “didn’t do anything wrong” when it came to the lender’s underwriting and origination practices.

In 2014, Mozilo told Bloomberg that he felt his company was not to blame for the subprime mortgage crisis.

“You’ll have to ask those people, ‘What do you have against Mozilo, what did he do?’” Mozilo said in 2014.

“Countrywide didn’t change. I didn’t change. The world changed,” he continued. “No, no, no, we didn’t do anything wrong,” he said, adding that a real estate collapse was the root of the crisis. “Countrywide or Mozilo didn’t cause any of that.”

And now, it appears that the DOJ is unable or unwilling to proceed with its case against Mozilo.

From Bloomberg:

U.S. prosecutors have abandoned their case against Angelo Mozilo, a pioneer of the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him.

The Justice Department has decided not to sue Mozilo, the co-founder of Countrywide Financial Corp., according to people familiar with the matter. That effectively ends nearly a decade of U.S. scrutiny of a man who became a face of risky lending practices and later an emblem of the government’s mixed success in holding individuals accountable.

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