Citigroup companies fined $28.8M in home borrower loan 'runaround'
Richard Cordray, director of the Consumer Financial Protection Bureau, speaks with USA TODAY's editorial board members.
The Consumer Financial Protection Bureau has fined two Citigroup subsidiaries a total of $28.8 million for mistreatment of homeowners seeking to avoid foreclosure.
The watchdog agency is requiring CitiMortgage pay an estimated $17 million to consumers and a $3 million civil penalty, and requiring CitiFinancial Servicing to refund about $4.4 million to consumers and pay a civil penalty of $4.4 million. The companies "kept consumers in the dark about foreclosure relief options" when consumers sought payment deferrals, the CFPB says, and required some borrowers seeking assistance to fill out excessive numbers of documents, some previously provided.
“Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes,” said CFPB Director Richard Cordray in a statement. “Consumers were kept in the dark about their options or burdened with excessive paperwork. This action will put money back in consumers’ pockets and make sure borrowers can get help they need.”
Mortgage servicer CitiMortgage must pay $17 million to about 41,000 consumers who were sent improper letters in 2014 and, in the future, must clearly identify specific documents needed from borrowers. The company, in addition to paying a $3 million civil penalty, must also freeze any foreclosures related to "the flawed process," the CFPB says, and contact the affected consumers.
CitiFinancial Servicing, the agency says, failed to consider borrowers' requests for loan payment deferments as a request for foreclosure relief options. The company must pay $4.4 million to about 7,800 borrowers between July 2011 and April 20, 2015, who paid for credit insurance that CitiFinancial should have canceled after a borrower missed for or more monthly payments. Subsequent payments went to insurance premiums rather than unpaid interest, the agency says.
CitiFinancial must better explain to consumers that interest accruing on daily simple interest loans during deferments becomes due immediately when borrowers begin making payments again. The company must also consider consumer requests for deferments as a request for loss mitigation options and stop forwarding bad information to credit reporting companies.
As part of the agreements, the Citi subsidiaries neither admitted nor denied any of the findings. “We are pleased to resolve these matters,” Citi said in a statement sent to USA TODAY.
The CFPB's action comes less than a week after the agency filed a lawsuit against Navient, the nation's largest student loan servicer, for harming tens of thousands of borrowers with obstacles such as providing incorrect payment information, incorrectly processing payments and failing to act on borrowers' complaints.
Add Commentall comments
by Ainhoa Barcelona Jacqueline Jossa celebrated her husband Dan...
Danielle Armstrong's turbulent long-term relationship with her on-screen...
The shooting that killed a man and wounded three other riders Thursday on...
The U.N. Secretary General has commended African countries for opening...
White House press secretary Sean Spicer apologized Tuesday afternoon for...