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CitiFinancial Settles With 35 States

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CitiFinancial Inc. has agreed to a settlement with 35 states over its failure to report tens of thousands of mortgages as required by the government.

The settlement was announced today by Massachusetts Gov. Deval Patrick.

The O’Fallon, Mo.-based consumer lender failed to report 91,127 residential mortgage loans as required by the Home Mortgage Disclosure Act, according to the statement. The loans in question were originated between 2004 and 2007.

The state discovered the error in May 2008 when its Division of Banks was examining the lender for compliance with state and federal laws. The problem was reportedly the result of an internal systems error.

“HMDA remains the primary tool we utilize to ensure compliance with fair lending laws and regulations,” Steven L. Antonakes, commissioner of the Massachusetts Division of Banks, said in the statement. “CitiFinancial’s failure to accurately report all required mortgage transactions significantly impacted our ability to complete that assessment.”

As part of the settlement, Citi agreed to pay a $1.25 million penalty to the 35 states included in the settlement. In addition, it has already begun resubmitting corrected HMDA reports.

Citi also agreed to revise its procedures and engage an independent consultant to thoroughly review the company’s fair-lending practices and determine whether the missing data was an attempt to cover up discriminatory lending practices.

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