Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Ed Cage

Citigroup to Consolidate Residential

Mortgage Business



According to a memo sent to U.S. employees today, New York-based Citigroup will consolidate its U.S. residential mortgage business, combining origination, servicing and capital markets activities.

“Aligning our existing U.S. mortgage businesses in this way will improve their overall effectiveness and allow us to better serve our existing clients while providing greater value to our shareholders,” said Carl Levinson, head of the U.S. Consumer Lending Group, and Jamie Forese, co-chief executive of Markets and Banking.

Citi said the new structure will allow it to develop:

- Uniform products, policies and practices for mortgage offerings;
- Portfolio and capital objectives focused on reducing mortgage exposure, especially in higher-risk segments;
- A single P&L for mortgage-related activities;
- Best practices with respect to pricing, risk management and return analytics;
- Consolidated and streamlined functions; and
- A more consistent face to our clients, regulators and other stakeholders.”

It is unclear if any jobs will be lost as a result of the restructuring, or when it will be completed.

The unit will be headed by Bill Beckmann, the current president and chief operating officer of CitiMortgage Inc.

“In this role, Bill will work closely with Jeff Perlowitz, the CMB head of Global Securitized Markets (GSM), to determine how to best integrate Citi Residential Lending’s origination and servicing functions and those in CitiMortgage,” the memo stated.

CitiMortgage had previously been separate from the loan operations in Citi’s banking unit.

The mortgage origination activities of CitiFinancial, Citibank and Smith Barney branches will remain exclusive from the new division.

In mid-September, the bank launched Citi Residential Lending, a non-conforming wholesale lending unit specializing in Alt-A and non-prime mortgage programs.

Since then, Citi has reported billions of dollars in write-downs tied to bad subprime mortgage bets, leading to the ousting of its CEO and rumors of records layoffs.

The largest U.S. bank may also be forced to write down $16 billion in the fourth quarter and post a much larger loss than previously estimated, Merrill Lynch analyst Guy Moszkowski said today.

CNBC television also reported that current CEO Vikram Pandit might cut 5 to 10 percent of Citigroup’s work force, on top of the 17,000 job cuts announced last April.

Shares of Citigroup ended the day down $1.12, or 3.96%, to $27.14, representing a new 52-week low for the embattled financial giant.”

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Only three of the 117 Ohio Federal Case dismissals I have identified thus far seem to directly pertain to Citibank or CitiMortgage:
  • Citibank, N.A. v. Coljohn; Filed 9/26/2007; Case No. 1:2007cv02949; Date Dismissed 10/31/2007; Judge Christopher A. BOYKO*
  • CitiMortgage, Inc. v. North; Filed 10/30/2007; Case No. 5:2007cv03376; Date Dismissed 12/12/2007; Judge David D. DOWD, Jr.
  • CitiMortgage, Inc. v. Stout; Filed 10/23/2007; Case No. 5:2007cv03280; Date Dismissed 12/12/2007; Judge David D. DOWD, Jr.
These cses were voluntarily dismissed by the plaintiff pursuant to Rule Rule 41(a)(2):
  • CitiMortgage, Inc. v. Lemaire; Filed 11/7/2007; Case No. 1:2007cv034750; Date Dismissed1/2/2008; Judge James S. GWIN
  • Citibank, N.A., as Trustee v. Coljohn; Filed 11/8/2007; Case No. 1:2007cv034900; Date Dismissed1/3/2008;Judge Christopher A. BOYKO*
* This case has now been dismissed TWICE without prejudice.  It seems to have been pulled when the plaintiff's lawyer had misgivings about pleading the new fabricated evidence which contradicted the old fabricated evidence.

But this short list of cases probably UNDERSTATES the impact of the Ohio federal court dismissals on CitiCorp. 

First, I am only about half way through my assessment of the Ohio cases.  I still have a LOT of Ohio Federal cases from October and November to examine.  I expect to see the directly related cases increase by 50% to 75% when I am complete. 

Second, there are already more Federal dismissals on the way in Ohio.

Third, given what has been shown in Dr. PORTER's study regarding the extent of misrepresentations and mistakes in a bankruptcy setting, the standing issue and greater scrutiny of mortgage investor and mortgage servicer representations for fraud is already spreading to the Federal Bankruptcy Courts.  Rulings like that of the Western PA Bankruptcy Court in the recent Countrywide case also assures that CitiMortgage and CitiBank will be facing increasing scrutiny in bankruptcy courts nationally soon.

Fourth, the Federal standings dismissals are certain to spill over into other district.  Quite a few folks have requested copies of various orders to use in their own pleadings.  No doubt other's just pulled the documents from PACER using the posted finding aids.

Fifth, the Federal standings dismissals already seem to be spilling over into Ohio state courts.

Finally, it is important to bear in mind that risk treatment strategies and MBS investment strategies have also spread both prime and subprime risk to CitiCorp in ways that are difficult to fully understand.  Just because CitiBank or CitiMortgage is not expressly named the plaintiff in very many of the dismissed Ohio cases so far, it does NOT necessarily follow that they are unaffected by the emerging meltdown in foreclosures due to widespread document fabrication.

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William A. Roper wrote:

"* This case has now been dismissed TWICE without prejudice. 

It seems to have been pulled when the plaintiff's lawyer had

misgivings about pleading the new fabricated evidence which

contradicted the old fabricated evidence."


                      _          _          _          _


Bill as you also know this sort of monkey business can range from

sheer incompetence all the way up to felonious.  Obviously the

ramifications of fabricating evidence will vary accordingly from

being a simple clerical error which we all are occasionally guilty

of to appropriate punitive damages if the tell-tale *pattern* exists

that demonstrates intent. Intent to defraud is of course a whole

new ballgame.


It should be noted however that the consequences can be equally

severe for the borrower who deliberately falsifies information.

Needless to say the Courts will also look harshly on a borrower

who has fabricated documents or evidence.


WAR since there is such a wide variety of possible “fabrications”

can you possibly amplify what your above example of fabricated

evidence consisted of?  In your opinion did it demonstrate a *pattern*

of intent?


Ed Cage

1804 Cross Bend, Plano Texas 75023


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