Attorney General Eric Holder, center, standing with from left to right, Acting Inspector General for the Federal Housing Finance Agency Michael Stephens, Tony West, Justice Department’s lead negotiator, Colorado US Attorney John Walsh and Loretta E. Lynch, United States Attorney for the Eastern District of New York, announces at the Justice Department in Washington Monday, July 14, 2014, that Citigroup will pay $7 billion to settle an investigation into risky subprime mortgages, the type that helped fuel the financial crisis. The agreement comes weeks after talks between the sides broke down, prompting the government to warn that it would sue the New York investment bank. The bank had offered to pay less then $4 billion, a sum substantially less that what the Justice Department was asking for. The settlement stems from the sale of securities made up of subprime mortgages, which fueled both the housing boon and bust that triggered the Great Recession at the end of 2007. (AP Photo/Pablo Martinez Monsivais)
BOSTON (AP) — Massachusetts will receive an almost $46 million share of a $7 billion federal-state settlement over Citigroup’s mortgage-backed security activities, the state attorney general’s office said Monday.
In the deal announced Monday, Citigroup will make a $4 billion civil monetary payment to the Justice Department, and another $500 million in compensatory payments to state attorneys general and the Federal Deposit Insurance Corp.
The bank will provide $2.5 billion in consumer relief, which will include financing for construction and preservation of affordable housing, as well as principal reduction and forbearance for residential loans.
The settlement stems from the sale of securities made up of subprime mortgages, which led to both the housing boom and bust that triggered the recession at the end of 2007.
Massachusetts, one of five states that entered into the agreement, will receive a direct cash payment of $45.7 million as a result of the settlement, Attorney General Martha Coakley said.
More than $15 million would go to direct consumer relief, and $6.5 million would help offset losses in the state’s pension fund.
The national settlement also stipulates that at least $10 million of the $2.5 billion in consumer relief paid by Citigroup would be available for borrowers in Massachusetts, according to the attorney general.
Coakley, a Democratic candidate for governor, said in a statement that her office has been a leader in holding large Wall Street firms accountable for their actions.
She cited six previous cash settlements her office had reached that were related to the subprime mortgage crisis.
