Citigroup Mortgage Settlement Approval Sought by Trustees

Mortgage & Real Estate









Trustees for mortgage bond investors asked a New York court to approve a $1.13 billion settlement reached in April with Citigroup Inc. as the bank seeks to resolve liabilities for loans it packaged and sold in the run-up to the 2008 financial crisis.

U.S. Bank NA, Deutsche Bank National Trust Co., HSBC Bank USA NA and Law Debenture Trust Co. of New York filed a petition seeking approval of the accord in New York State Supreme Court in Manhattan yesterday under a law that allows trustees to seek approval of their actions.

The settlement covers 68 securitization trusts that issued a combined $59.4 billion in mortgage-backed securities from 2005 to 2008, according to a statement issued by Citigroup in April. The pact was negotiated by the bank and a group of 19 institutional investors, represented by Gibbs Bruns LLP, holding more than $5.3 billion of the unpaid principal balance of the securities, according to the petition.

Pools of home loans securitized into bonds were central to the housing bubble that helped send the U.S. into the worst recession since the 1930s. The housing market collapsed and demand for the securities evaporated.

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