UPDATE 2-Mortgage investors sue Citi over underwriting

* Charles Schwab, Cambridge Place sue Citi over mortgages

* Lawsuits allege faulty information on mortgage bonds

* Citigroup shares up 3.0 percent
(Adds detail on Schwab, Federal Home Loan lawsuits, investors;
updates shares)

NEW YORK, Nov 5 (BestGrowthStock) – Several Citigroup Inc (C.N: )
mortgage bond investors, including Charles Schwab Corp (SCHW.N: )
and hedge fund Cambridge Place Investment Management, have sued
the bank over its home loan underwriting processes, according
to a regulatory filing on Friday.

The investors, which also include the Federal Home Loan
Banks of Chicago and Indianapolis, filed lawsuits against
Citigroup starting in July, Citigroup said in the filing with
the U.S. Securities and Exchange Commission.

The lawsuits allege “actionable misstatements or omissions
in connection with the issuance and underwriting of residential
mortgage-backed securities,” Citigroup said, adding that the
investors “are seeking rescission of their investments or other
damages.”

Several large banks are facing pressure to repay investors
for soured mortgages that the banks bundled into bonds and
sold.

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.

“The poor performance of the loans in these pools
demonstrates that the originators departed extensively from
their underwriting guidelines when making these loans,” Schwab
alleged.

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 (GS.N: ), Morgan Stanley (MS.N: ) (Read more about the money market today. ) and JPMorgan Chase
& Co (JPM.N: ). [ID:nN12207842]

The Federal Home Loan Banks of San Francisco and Seattle
have also sued Wall Street banks to rescind billions of dollars
in mortgage bonds. [ID:nN12186124]

Citigroup said in its filing on Friday that the mortgage
investors’ lawsuits are in “preliminary stages” and that it
could not currently estimate the potential losses, if any, it
could face from them.

The bank’s shares were up 3.0 percent at $4.40 in morning
trading.
(Reporting by Maria Aspan and Jonathan Stempel; Editing by
Lisa Von Ahn, Dave Zimmerman)

UPDATE 2-Mortgage investors sue Citi over underwriting