WASHINGTON The U.S. consumer financial watchdog
said on Monday it had fined subsidiaries of Citigroup Inc $28.8 million for giving “the runaround to borrowers” on
mortgage servicing by keeping them in the dark about options to
avoid foreclosure or making it difficult for them to apply for
CitiMortgage will pay an estimated $17 million to compensate
wronged consumers, as well as a civil penalty of $3 million, the
Consumer Financial Protection Bureau said. CitiFinancial
Services will refund approximately $4.4 million to consumers,
and pay a civil penalty of $4.4 million.
The CFPB said the subsidiaries neither admitted nor denied
the findings in the consent orders.
“”We are pleased to resolve these matters,” said Mark
Rodgers, director of Citi public affairs.
In the first hour after the penalties were announced, Citi
shares dropped to $55.52 from $55.77. In mid-afternoon trading they recovered slightly, rising to $55.88, off 0.4 percent.
“Citi’s subsidiaries gave the runaround to borrowers who
were already struggling with their mortgage payments and trying
to save their homes,” CFPB Director Richard Cordray said in a
statement. “Consumers were kept in the dark about their options
or burdened with excessive paperwork.”
The penalties come less than a week after the CFPB, a
federal watchdog for protecting individuals against fraud in
lending, sued the country’s largest student loan servicer,
Navient Corp, for similarly confusing its customers
over options with their loans.
As part of the agreement CitiMortgage, which services the
loans for Citibank and government-sponsored entities such as
Fannie Mae and Freddie Mac, must freeze all
According to the CFPB when borrowers applied to it for
foreclosure relief CitiMortgage demanded “dozens of documents
and forms that had no bearing on the application or that the
consumer had already provided.”
Many were actually not needed to complete the application,
the CFPB added.
CitiFinancial, meanwhile, must improve disclosure on
deferments and stop sending credit raters “bad information” that
settle accounts were “charged off” – an indication that the
borrower was delinquent.
#1 Lawyers Search Engine