A unit of Citigroup Inc. mortgage has agreed to pay out $158.3 million in order to resolve allegations from the U.S. regarding the quality of the loans it had submitted to a U.S. government-backed mortgage insurance program.

As a part of the settlement, CitiMortgage Inc. conceded that it had submitted loans to be insured by the U.S. Department of Housing and Urban Development that didn't meet all of the program's underwriting requirements.

"For far too long, lenders treated HUD's insurance of their mortgages like they were playing with house money. In fact, they were playing with other people's money and other people's homes," said Preet Bharara, the U.S. attorney in Manhattan.

This settlement is the latest effort from federal prosecutors to pursue civil penalties with companies that allegedly played a role in the housing crisis.

In 2011, federal prosecutors raised similar actions against closely held Houston-based home lender Allied Home Mortgage Capital Corp. and Deutsche Bank AG for misrepresentations regarding the government-backed program, which was administered by the Federal Housing Administration.

Last week, Bank of America Corp. came to an agreement to pay $1 billion to settle civil allegations by federal prosecutors in Brooklyn for similar alleged conduct regarding FHA loans.

The pact follows a separate $25 billion settlement with five banks, including Citigroup, announced last week over alleged foreclosure abuses by lenders.

To learn more about the FHA and HUD programs, please go to: http://californiamortgagedirect.com/federal-housing-administrator

For more information about the lawsuit, please go to: http://www.topclassactions.com/lawsuit-settlements/lawsuit-news/798-citi...