The Consumer Financial Protection Bureau announced Monday (Jan. 23) that it took separate actions against CitiFinancial Servicing and CitiMortgage for allegedly giving struggling homeowners the runaround when they were looking for options to avoid losing their homes.
In a press release announcing the two actions, the government watchdog said the mortgage servicing arm of Citi didn’t provide borrowers with information about their options to avoid foreclosing and/or burdened the borrowers with paperwork that was excessive to apply for foreclosure relief. The CFPB is charging CitiMortgage with a roughly $17 million fine to compensate the consumers who were wronged and a civil penalty of $3 million. In the case of CitiFinancial Servicing, the CFPB is ordering it to refund about $4.4 million to consumers and pay a $4.4 million civil penalty.
“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 the press release. “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.”
Among the charges, the CFPB found that, when borrowers applied to have their mortgage payments deferred, CitiFinancial Servicing failed to consider it as a request for foreclosure relief options, and as a result, borrowers may have missed out on options that may have been more appropriate for them. Another allegation: It misled consumers about the impact of deferring payment due dates, with the CFPB saying “consumers were kept in the dark about the true impact of postponing a payment due date” and about the additional interest that would be added to the end of the loan. Other claims included charging consumers for credit insurance that should have been canceled and prematurely canceling credit insurance for some borrowers, with some of them having claims denied because CitiFinancial Servicing had improperly canceled their insurance.