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Citi Defrauded Homeowners On Reinsurance: Class Action

A Pennsylvania couple hit Citibank NA and a slew of private mortgage insurers with a putative class action Thursday alleging they schemed to push fraudulent reinsurance on home mortgages that involved illegal kickbacks and referral payments with other lenders.

Citibank and the insurers enacted a "captive reinsurance scheme" in which the insurers paid Citibank illegal referral payments in the form of purported reinsurance premiums, and Citibank received an unlawful split of private mortgage insurance premiums paid by the insurers' customers referred by Citi entities, according to homeowners Linda and Vincent Menichino's complaint.

Both activities violated the Real Estate Settlement Procedures Act of 1974, they allege.

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