NEW YORK (CNNMoney) -- Citigroup looks like it's next to face a reckoning for the mortgage crisis.
Published reports say Citi is close to $7 billion deal to settle charges that it packaged bad mortgages during the run-up to the financial crisis.
The amount is far more than the $4 billion Citi was reported offering to pay as recently as June. But the Justice Department is said to have threatened to sue the bank if it did not reach a larger settlement.
The settlement would be about half of the $13 billion settlement that rival JPMorgan Chase agreed to pay last November to settle similar charges, and is also smaller than a $9.5 billion settlement with Bank of America this past March.
Citigroup and other major banks bundled together mortgages made to homeowners during the housing boom ahead of the financial crisis, when rising home prices obscured shoddy underwriting practices and the riskiness of the loans.
When prices started to decline, loan defaults and foreclosures soared and investors, including government backed Fannie Mae and Freddie Mac, were left with billions in losses on those mortgage securities.
The Citigroup mortgage deal reportedly would include both a cash penalty and relief for homeowners with Citgroup mortgages. It reportedly could be announced within the next week.
Citigroup has been under increasing pressure from banking regulators, which has hurt its share price.
The Federal Reserve gave Citigroup a poor grade in its stress test in March and blocked its plans to return money to shareholders through a $6.4 billion share repurchase and an increase in its dividend.
By contrast, Bank of America initially won approval of its own share repurchase and dividend increase soon after its mortgage settlement, although it had to drop those plans after admitting an error in the calculation of its capital ratio.
Citigroup has also disclosed that its under investigation for alleged fraud and money laundering violations at its Mexican subsidiary Banamex.
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