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Foreclosure Settlement for Citi Units

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Citigroup Inc.’s home-lending and finance company servicing units have agreed to settle allegations of improperly handling distressed borrowers.

The first settlement was with CitiFinancial Servicing. The business is headquartered in O’Fallon, Missouri and made up of four separate entities.

The second settlement was with CitiMortgage Inc. The company, which is also based in O’Fallon, operates as a subsidiary of Citibank, N.A.

An announcement Monday from the Consumer Financial Protection Bureau alleges that CitiFinancial
provided deferments to delinquent borrowers but didn’t treat the deferments as a request for foreclosure relief options as required by CFPB. It also allegedly misled borrowers by making them think accrued interest during the deferment period would be added on to the loan balance instead of becoming due at the end of the deferment period.

The company is further accused of
charging for credit insurance even though it should have been canceled and prematurely canceling credit insurance for other borrowers.

In addition, CitiFinancial is accused of keeping borrowers
in the dark about foreclosure relief options, sending inaccurate consumer information to credit reporting companies and failing to investigate consumer disputes.

The CFPB claims the practices violated the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

CitiFinancial agreed to a consent order that requires to fix its servicing practices, pay $44 million in borrower restitution and pay a $4.4 million civil penalty.

CitiMortgage is accused of
requiring dozens of unnecessary documents, such as teacher contracts and Social Security award letters, from 41,000 borrowers who asked for assistance.

The actions allegedly violated RESPA and Dodd Frank.

In addition to correcting its practices, the consent order with CitiMortgage requires that it pay $17 million to impacted borrowers and a $3 million civil penalty.

Mortgage Daily Publisher Sam Garcia worked for a unit that was acquired by CitiFinancial Inc. from 1984 to 1993.

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