By Jeff Bater
Two Citigroup mortgage servicing units have agreed to pay $28.8 million for “giving the runaround” to borrowers struggling to save their homes, the Consumer Financial Protection Bureau said.
The CFPB is requiring CitiMortgage to pay an estimated $17 million to compensate consumers and pay a civil penalty of $3 million.
In a separate action, the bureau is requiring CitiFinancial Servicing to refund about $4.4 million to consumers and pay a civil penalty of $4.4 million.
The CFPB said 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.
“Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes,” CFPB Director Richard Cordray said in a statement.
Both subsidiaries are based in O’Fallon, Mo. In entering the consent orders with the CFPB, the companies neither admitted nor denied the findings in the cases.
Mark Rodgers, director of public affairs at Citi, said in an e-mailed statement, “We are pleased to resolve these matters.”
CitiMortgage is a mortgage servicer for Citibank and government-sponsored entities such as Fannie Mae and Freddie Mac. As part of the agreement with the CFPB, CitiMortgage must freeze any foreclosures related to the flawed application process.
CitiFinancial Servicing, as a mortgage servicer, collects payments from borrowers for loans it originates. It also handles customer service, collections, loan modifications, and foreclosures. The CFPB accused the subsidiary of violating the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, and Dodd-Frank’s prohibition on deceptive acts or practices.
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To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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