For many homeowners, the word foreclosure isn’t one they’d like to hear. If anything, foreclosure is the very last option most people hope to seek. Citigroup, a mortgage company, will pay $28.8 million for withholding information about avoiding foreclosure from its homeowners. This caused great difficulty for people seeking to apply for foreclosure relief.
It is estimated that CitiMortgage is to pay $17 million in compensations of those who were wronged in the process. CitiMortgage is also responsible for $3 million in civil penalties. On the other hand, CitiFinancial Services will pay out $4.4 million to wronged consumers as well as the same amount in a civil penalty.
Director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, commented on the situation saying, “Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes.” When it came time for those consumers to seek help from Citi, Cordray said they “were kept in the dark about their options or burdened with excessive paperwork.”
The CFPB seeks to protect consumers from fraudulent lending. Recently it sued Navient Corp, a large student loan lender, for similar allegations.
According to the agreement, CitiMortgage, which funds loans for Citibank as well as Fannie Mae and Freddie Mac, will hold all activity related to foreclosures. However, it’s only those who applied for help but were given the runaround or borrowers who never received information as to whether a decision was made.
Nearly 41,000 consumers received letters from the loan servicer back in 2014. The borrowers were asked to send documents and forms that were of no importance to their application process. They were also asked to send in paperwork that had been previously provided to CitiMortgage. In fact, most of the paperwork requested wasn’t even required for the application.
In a statement on the issue, Citi affairs director, Mark Rodgers, says, “We are pleased to resolve these matters.”