CFPB fines CitiFinancial Servicing and CitiMortgage $29 million

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The Consumer Financial Protection Bureau hit CitiFinancial Servicing and CitiMortgage with enforcement actions over how both companies handled borrower foreclosures.

CitiMortgage must pay an estimated $17 million to compensate wronged consumers, and pay a civil penalty of $3 million. CitiFinancial Services must pay approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. In total, both banks will pay $28.8 million.

“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. “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.”

Specifically, CitiFinancial Servicing is a mortgage servicer; made up of four entities incorporated in Delaware, Minnesota, and West Virginia, and headquartered in O’Fallon, Missouri. All are direct subsidiaries of CitiFinancial Credit Company, and an indirect subsidiary of New York-based Citigroup.

CitiFinancial Servicing is responsible for collecting payments from borrowers for loans it originates, along with handling customer service, collections, loan modifications, and foreclosures.

According to the CFPB, CitiFinancial Servicing did not treat a deferment as a request for foreclosure relief options, also called loss mitigation options, as required by CFPB mortgage servicing rules. The company also violated the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition on deceptive acts or practices.

In addition to the fines, CitiFinancial Servicing must clearly disclose conditions of deferments for loans and stop supplying bad information to credit reporting companies. The full consent order can be found here.

Meanwhile, CitiMortgage is a mortgage servicer for Citibank and the government-sponsored enterprises and is responsible for fielding consumer requests for foreclosure relief.

By way of comparison, CitiMortgage is incorporated in New York, headquartered in O’Fallon, Missouri, and is a subsidiary of Citibank.

According to the CFPB, some borrowers who asked for assistance were sent a letter by CitiMortgage demanding dozens of documents and forms that had no bearing on the application or that the consumer had already provided. However, the law says that if borrower does not submit all the required documentation with the initial application, servicers must let the borrowers know what additional documents are required and keep copies of all documents that are sent.

As a result, the CFPB said CitiMortgage violated the Real Estate Settlement Procedures Act, and the Dodd-Frank Act’s prohibition against deceptive acts or practices.

Along with the fines, Citi Mortgage must clearly identify documents consumers need when applying for foreclosure relief and freeze any foreclosures related to the flawed application process and reach out to harmed consumers. The full consent order can be found here.

A Citi spokesperson gave the following comment, “We are pleased to resolve these matters.”

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