The (CFPB) took action Monday against CitiFinancial Servicing and CitiMortgage. for making it difficult for struggling homeowners to avoid foreclosure.
According to a statement released Monday, the CFPB issued a consent order requiring CitiMortgage to pay an estimated $17 million to compensate wronged consumers, and pay a civil penalty of $3 million. The bureau will also require CitiFinancial Services to refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million.
The bureau alleges the mortgage servicers failed to inform borrows about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief.
“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.”
CitiFinancial Servicing 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 by withholding information on foreclosure relief and misleading consumers about the impact of deferring payment due dates. The bureau’s statement also said Citifinancial Servicing charged consumers for credit insurance that should have been cancelled, prematurely canceled credit insurance for some borrowers, sent inaccurate consumer information to credit reporting companies, and failed to investigate consumer disputes.
CitiMortgage, according to the CFPB, demanded dozens of documents from borrowers that weren’t germane to their application for foreclosure relief, many of which had nothing to do with a borrower’s financial circumstances. The letters making these demands were sent to about 41,000 customers.
In addition to monetary penalties, CitiFinancial Servicing must clearly disclose conditions of deferment for loans and stop supplying bad information to credit reporting companies. CitiMortgage must also 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 consent order reflects that CitiMortgage took affirmative steps to reach out to some borrowers before it may have been required to by CFPB rules.
Citi has yet to comment as of this writing.