By Andrew A. Turner, J.D.
Mortgage servicers CitiFinancial Servicing and CitiMortgage, Inc. kept struggling homeowners in the dark about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief, according to findings in consent orders settling Consumer Financial Protection Bureau enforcement actions. “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.
The CFPB is requiring CitiMortgage to pay an estimated $17 million to compensate wronged consumers, and to pay a civil penalty of $3 million; and is requiring CitiFinancial Services to refund approximately $4.4 million to consumers, and to pay a civil penalty of $4.4 million.
When borrowers applied to have their payments deferred, CitiFinancial Servicing failed to consider it as a request for foreclosure relief options and misled consumers about the impact of deferring payment due dates, according to the CFPB. As a result, borrowers may have missed out on options that may have been more appropriate for them, and more of the borrowers’ payment went to pay interest on the loan instead of principal when they resumed making payments.
The CFPB said borrowers seeking loss mitigation asking for assistance were sent a letter by CitiMortgage “demanding dozens of documents and forms that had no bearing on the application.” Documents were requested that were unrelated to the borrowers’ financial circumstances or that already had been provided.
Consent orders. Under the consent order, CitiFinancial Servicing must disclose the conditions of deferments for loans and stop supplying bad information to credit reporting companies. CitiMortgage agreed to identify documents consumers need when applying for foreclosure relief and to freeze any foreclosures related to the flawed application process. In addition, the company will reach out to these borrowers to determine if they want foreclosure relief options.
For more information about CFPB enforcement actions, subscribe to the Banking and Finance Law Daily.
