WASHINGTON –The Consumer Financial Protection Bureau has taken separate actions against CitiFinancial Servicing and CitiMortgage, Inc. for what it called “giving the runaround to struggling homeowners seeking options to save their homes.”
“The mortgage servicers kept borrowers in the dark about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief,” the CFPB said.
The agency is requiring CitiMortgage to pay an estimated $17 million to compensate wronged consumers in addition to paying a civil penalty of $3 million; and requiring CitiFinancial Services to refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 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 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.”
CitiFinancial Servicing is made up of four entities incorporated in Delaware, Minnesota, and West Virginia, and headquartered in O’Fallon, Mo. All are direct subsidiaries of CitiFinancial Credit Company, and an indirect subsidiary of New York-based Citigroup, Inc., according to the CFPB.
The CFPB said that some consumers who notified CitiFinancial Servicing that they faced a financial hardship when it came to making payments were offered “deferments.”
“This postponed the consumer’s next payment due date, and the consumer could still be considered current on payments,” the CFPB said. “But 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.”
According to the CFPB, 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.