Citi Settles for $7 Billion

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Ouch!  Earlier this week it was announced that Citigroup had settled the inquiry into the company’s mortgage practices – to the tune of $7 billion.

The deal, which was settled with the Justice Department, represents one of the largest settlements ever made in response to a federal inquiry; specifically in terms of the penalties levied. Of the $7 billion, $4 billion was in penalties alone while $2.5 billion will go towards providing mortgage modifications to homeowners. Another $500 million will go to the Federal Deposit Insurance Corp and 5 separate states.


While this is a huge hit, apparently Citi can afford it. Their earnings for the first quarter are essentially wiped out, but eh company made $14 billion last year and, as of 6/30/14 had $35 billion in cash on the books.
So what does this mean? It means the bank has admitted to all of the things they allegedly did wrong, in the process admitting to their role in the financial crisis that has devastated so many since 2008.

What does this mean to you? If you have a loan with Citi, you may see the amount of your loan balance reduced. If not the balance, you may receive a lowered interest rate. If you are in the process of buying a home, you may find you are able to qualify for additional assistance with your closing costs or downpayment balances.

Citigroup was, of course, under a lot of pressure. The Federal Reserve gave the company a poor rating in the most recent stress test and made moves to block some other plans the company had to increase their dividends.

For more information, check out the following:

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