Citigroup is preparing to pay approximately $20 million to thousands of homeowners who were eligible to receive compensation as part of the Independent Foreclosure Settlement reached between the government and 10 mortgage servicers two years ago over loan servicing and foreclosure procedure violations, according to media reports.
According to a report from Bloomberg citing "two people with knowledge of the matter," Citigroup failed to deliver cash compensation to about 23,000 homeowners and will now pay about $20 million to the eligible borrowers – after the government noticed the oversight. The borrowers will receive the compensation in amounts ranging from a few hundred dollars to as much as $125,000 each depending on the type of servicer error that was committed, according to the Fed.
"We want to make sure that everyone eligible for compensation under the agreement receives what they are due," said Mark Rodgers, a spokesman for CitiGroup, in an email to DS News.
An Independent Foreclosure Review concluded in January 2013 with Citigroup and nine other mortgage servicers reaching an agreement with the Federal Reserve and the Office of the Comptroller of the Currency pay a combined total of $8.5 billion to more than 3.8 million homeowners whose homes were in foreclosure in 2009 and 2010as a result of illegal servicing practices. As part of the settlement, the 10 servicers agreed to pay $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other types of assistance such as loan modifications and forgiveness of deficiency judgments. Those numbers were later increased to 15 servicers and a total of $10 billion in payments, according to the Fed.
Citigroup had made cash payments of about $300 million and spent about $500 million on foreclosure prevention, according to an OCC report cited in the Bloomberg story.
The New York-based megabank has a history of regulatory troubles. In 2008, the bank received a bailout from the government during the financial crisis. In July 2014, Citigroup settled with the Department of Justice to resolve claims that it misled investors as to the quality of certain residential mortgage-backed securities. In November 2014, Citigroup settled for $1.02 billion to resolve claims that the bank tried to manipulate foreign-exchange benchmarks. Citigroup was one of six firms to settle in that case; the combined total of the settlement was $4.3 billion.