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Citigroup Inc. agreed to pay $1.13 billion to settle claims from mortgage-bond investors as it seeks to curb liabilities tied to the financial crisis, Bloomberg News reported yesterday. The 68 securitization trusts covered by the settlement issued a combined $59.4 billion in mortgage-backed securities from 2005 to 2008, the New York-based bank said yesterday. The agreement covers 18 investors represented by Gibbs & Bruns LLP and trustees have until June 30 to accept the deal, the law firm said in a separate statement. The accord must be approved by the Federal Housing Finance Agency. Citigroup, the third-biggest U.S. bank, is resolving a portion of liabilities tied to mortgages it packaged and sold to investors in the run-up to the 2008 crisis. JPMorgan Chase & Co. and Bank of America Corp., the two largest U.S. lenders, previously agreed to multibillion-dollar settlements with Gibbs & Bruns clients.

Bank of America Corp. should face U.S. Securities and Exchange Commission claims over $855 million in mortgage-backed securities, said a judge who last week advised that a Justice Department complaint over the same securities should be thrown out, Bloomberg News reported today. U.S. Magistrate Judge David Cayer in Charlotte, N.C., recommended yesterday that Bank of America’s request to dismiss the SEC case be denied. The complaint adequately alleged the bank didn’t disclose in offering documents for the securities that the bulk of the mortgages pooled in them were bought wholesale from third-party brokers, he said. Judge Cayer said in a March 27 recommendation that the Justice Department’s lawsuit seeking to hold Bank of America liable under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) should be thrown out. The 1989 law with a 10-year statute of limitations has become a tool for federal prosecutors bringing civil claims for alleged wrongdoing in the buildup to the 2008 financial crisis. The magistrate judge’s findings in both cases will be reviewed by U.S. District Judge Max O. Cogburn Jr. The bank or the government can then appeal any order by Cogburn.

U.S. Magistrate Judge David Cayer said that Bank of America Corp. should win dismissal of a U.S. Justice Department lawsuit accusing it of misleading investors about the quality of loans tied to $850 million in mortgage-backed securities, Bloomberg News reported today. The government’s allegation that the bank made false statements wasn’t properly supported, Judge Cayer said yesterday in a recommendation to dismiss the case. The U.S., which filed a notice that it will object, has a chance to challenge the recommendation before a district court judge and appeal any dismissal. If the case is dismissed, it will be a first for about a dozen companies that have been targeted under the Financial Institution Reform, Recovery and Enforcement Act of 1989, known as FIRREA, which allows the government to sue an individual or group, rather than charge them with a crime, for fraud that affects a federally insured financial institution.

Bank of America Corp. and former Chief Executive Kenneth Lewis took big steps to put the financial crisis behind them by paying state and federal agencies to settle lawsuits over the acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co., the Wall Street Journal reported today. The Charlotte, N.C.-based lender said yesterday that it would pay $9.5 billion to settle mortgage claims with Fannie Mae, Freddie Mac and their federal regulator. Bank of America also agreed to pay the state of New York $15 million to end a civil lawsuit by New York state Attorney General Eric Schneiderman alleging that the bank duped shareholders by failing to disclose mounting losses at Merrill before buying the securities firm in a rushed deal struck in 2008 near the height of the financial crisis. The bank neither admitted nor denied wrongdoing in both settlements.

HSBC Holdings Plc was accused of targeting minority borrowers in Chicago with high-cost mortgage loans as Cook County, Ill., followed other local governments in trying to hold subprime lenders liable for urban blight, Bloomberg News reported yesterday. Cook County, second in size only to Los Angeles County, seeks unspecified compensatory and punitive damages for its alleged costs to police and maintain deteriorating neighborhoods and from lost tax revenue on vacant properties, according to the complaint filed March 21 against HSBC North America Holdings. The county’s lawsuit against HSBC, Europe’s largest bank, mirrors claims brought by Baltimore, Cleveland, and Memphis, Tennessee, targeting banks under the Fair Housing Act for making loans to minority borrowers who didn’t qualify for them, or for giving high-interest subprime mortgages to minority borrowers who could have qualified for prime loans.

Dolan Co., a provider of legal-support services and publishing, filed for bankruptcy after agreeing to be taken over by lenders to cut debt linked to its former mortgage foreclosure-processing business, Bloomberg News reported yesterday. The Minneapolis-based company listed debt of $185.9 million and assets of $236.2 million as of Sept. 30 in a Chapter 11 petition filed today in Wilmington, Delaware. Dolan said that it didn’t expect its DiscoverReady LLC document-review unit to join it in bankruptcy. All company services, including those provided by DiscoverReady, will continue without interruption, according to the statement.

McGraw Hill Financial Inc.’s Standard & Poor’s unit must face California’s claims it deceived the state’s pension funds in its ratings of mortgage-back securities, a judge said in a provisional ruling, Bloomberg News reported on Saturday. California Superior Court Judge Curtis Karnow in San Francisco said on Friday that he was inclined to deny the company’s request to throw out the state’s claims of deceptive conduct from a lawsuit alleging S&P violated false-advertising and business practices laws. The state accuses S&P of using “magic numbers” to inflate ratings of mortgage-backed securities bought by the California Public Employees’ Retirement System and the state’s teacher pension fund. The funds lost more than $1 billion on the investments, according to the state.

Credit Suisse Group AG, Switzerland’s second-biggest bank, agreed to pay $885 million to settle lawsuits by the Federal Housing Finance Agency over mortgages sold to Fannie Mae and Freddie Mac, Bloomberg News reported on Friday. The company will book a charge of 275 million francs ($312 million) after taxes in the fourth quarter of 2013, resulting in a restatement of results to a net loss of 8 million francs for the period, the Zurich-based bank said yesterday. Credit Suisse was among 18 lenders sued by the FHFA in 2011 to recoup losses on about $200 billion in mortgage-backed securities sold to the two government-sponsored companies before the financial crisis. Nine companies, including JPMorgan Chase & Co., Deutsche Bank AG and UBS AG, have agreed to pay more than $9.2 billion to settle similar lawsuits by FHFA.

Wells Fargo created an elaborate guide for how to produce missing documents to foreclose on homeowners, according to a lawsuit that has caught the attention of state and federal regulators, the Washington Post reported yesterday. The bank denies wrongdoing, but the allegations rekindle claims that lenders, including Wells Fargo, used forged and shoddy paperwork during the recession to quickly foreclose on struggling homeowners, a practice known as “robo-signing.” Those charges led to a $25 billion national mortgage settlement that was supposed to put an end to such abusive practices, but bankruptcy lawyer Linda Tirelli says nothing has changed. In the course of defending a New York homeowner facing foreclosure, Tirelli said that she found a 150-page manual instructing Wells Fargo lawyers how to process foreclosures when a key document, known as an endorsement, is missing. Lenders need endorsements to prove that they own the mortgage, before they can foreclose on a homeowner.

Bipartisan Senate legislation would wind down Fannie Mae and Freddie Mac in five years and in the interim would maintain the current arrangement in which the mortgage financiers pay all of their profits to the Treasury, Bloomberg reported today. A draft of the measure, released yesterday by Senate Banking Committee Chairman Tim Johnson and Republican Mike Crapo, would ensure that the U.S. maximizes its return on the 2008 taxpayer bailout of the two companies before junior preferred and common shareholders receive any proceeds. The bill would sell off the companies’ assets and replace them with government bond insurance that would kick in only after private capital suffered significant losses. The two senators announced key provisions of the bill on March 11. The five-year wind down of the two companies would be extended if necessary to prevent market disruptions or spikes in borrowing costs. Johnson and Crapo said that they took the “rare action” of releasing bill language on a weekend “to balance the committee members’ interests in having adequate time to review the legislation while advancing housing finance reform in a timely manner.” Meanwhile, investors are suing the U.S. to challenge the arrangement in which all the companies’ profits go to the Treasury.