Citigroup Inc. will let customers challenge the suspension of home-equity loans and provide $120 apiece to some ex-borrowers whose credit lines were cut, under the settlement of a lawsuit challenging its practices.
The accord, disclosed today in documents filed in federal court in San Francisco, resolves a class action, or group lawsuit, that accused the bank of improperly suspending or reducing home-equity lines of credit for several hundred thousand customers.
Citigroup’s Citibank unit will improve its suspension notices and restore some customers’ access to home-equity accounts under the agreement, according to the filing.
Borrowers who closed their accounts and were charged a fee are eligible for $120 each under the agreement. The filing doesn’t say how many borrowers that covers. New York-based Citibank agreed to pay $1.2 million to the customers’ lawyers.
The settlement requires court approval, and customers seeking the $120 payment will need to submit claims. Customers whose accounts were suspended or reduced by Citibank based on their property value from 2008 through January are eligible for settlement benefits.
Citibank denied wrongdoing, according to the court filing by the customers’ lawyers. Mark Rodgers, a bank spokesman, declined in an e-mail to comment immediately on the agreement.
The case is In Re Citibank Heloc Reduction Litigation, 3:09-cv-00350, U.S. District Court, Northern District of California (San Francisco).