The Justice Department and Citigroup are reportedly close to a deal to settle allegations it defrauded investors on billions of dollars worth of mortgage securities before the financial crisis hit. Citi (C) may pay $7 billion to put the probe behind it. The New York Times (NYT) is reporting Citi is expected to pay roughly $4 billion in cash. The remainder of the $7 billion would include so-called soft dollar penalties, including mortgage modifications and other forms of relief to homeowners, and possibly payments to state attorneys general involved in the case. The Ne York Times also reports Bank of America (BAC) will be the next in line to face the Justice Department. TheStreet's Susannah Lee has the details from Wall Street.

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