Citigroup Sued in N.Y. for ‘Accelerated’ Foreclosures November 19, 2010, 5:58 PM EST
By Patricia Hurtado
(Updates with details from complaint in second paragraph.)
Nov. 19 (Bloomberg) -- Citigroup Inc. was accused of using fraudulent paperwork to process “accelerated” mortgage foreclosures in a lawsuit filed in federal court in New York.
“Motivated by speed and profits rather than obligatory attention to detail, Citi failed to record necessary documents to legally foreclose,” borrower Brian Costigan said in his complaint seeking class-action status on behalf of others who had home loans with the New York-based bank.
The complaint includes claims for breach of contract, breach of good faith and fair dealing and fraud against Citigroup and its mortgage unit, Citimortgage Inc.
Costigan said Citigroup employees submitted fraudulent affidavits that allegedly proved Citi’s control of a mortgage and “outsourced tasks” to outsiders without adequate oversight. He said the bank used “robo signers’ and didn’t verify amounts borrowed and determine which institutions had a right to foreclose.
Costigan received a loan for his New Jersey home from Citigroup, according to his complaint. After experiencing financial difficulties, he obtained a loan modification in April 2009.
Costigan said that while he made timely payments through December 2009, he was told in January that his case was being reviewed and informed a month later that he would not receive permanent approval for his loan modification. He later was told his loan modification was denied and Citigroup foreclosed on his home in August, according to the complaint.
Mark Rodgers, a spokesman for Citigroup, didn’t immediately return a voicemail message left at his office after business hours seeking comment.
The case is Brian Costigan v. Citigroup, 10-CV-8776, U.S. District Court, Southern District (Manhattan). Link to Company News:C US <Equity> CN <GO>
--Editors: Peter Blumberg, Michael Hytha
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