Citigroup Inc mortgage bond investors, including Charles Schwab Corp and hedge fund Cambridge Place Investment Management, have filed suit against the bank over its home loan underwriting processes, according to a Reuters report.
In a regulatory filing today Citigroup said that the investors lawsuit alleges "actionable misstatements or omissions in connection with the issuance and underwriting of residential mortgage-backed securities." The investors "are seeking rescission of their investments or other damages."
Both investors have lawsuits pending against the bank already. Charles Schwab in July sued Citigroup and several other banks over losses on its $1.38 billion investment in 36 mortgage-related securitizations. In the lawsuit, which is now pending in the U.S. District Court in San Francisco, Schwab said the banks misled it about the risks of tens of thousands of the underlying loans.
Cambridge Place's lawsuit, filed in July, is seeking to recoup $1.2 billion it lost on subprime mortgages. The hedge fund's claim named Citigroup and other major banks, including Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co.
