Citigroup to Pay $28.8 Million Over Harm to Borrowersby
Company agrees to resolve accusions over informing customers
Consumer protection bureau has faced criticism from lawmakers
Citigroup Inc. agreed to pay $28.8 million to settle allegations by U.S. regulators that two of the bank’s mortgage-servicing units misled borrowers, the Consumer Financial Protection Bureau said.
The company failed to inform consumers of options to avoid foreclosure and misled them about the impact of postponing payment deadlines on their ability to pay down debt, the CFPB said Monday in a statement.
“Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes,” Richard Cordray, director of the Consumer Financial Protection Bureau, said in the statement. “Consumers were kept in the dark about their options or burdened with excessive paperwork.”
Mark Rodgers, spokesman for Citigroup, said via e-mail that the bank is “pleased to resolve these matters.”
Republicans and the financial industry have been vocal critics of the CFPB, arguing it lacks accountability, pursues investigations outside its jurisdiction and that its structure gives too much power to the agency’s director.
Some lawmakers have urged Trump to oust Cordray before his term ends. That would require President Donald Trump to show cause, such as proving Cordray was negligent in carrying out his duties or has run the agency inefficiently. Trump could also fire Cordray because the agency’s structure is unconstitutional, some lawmakers have said.
No decision has been made yet about the CFPB’s leadership, White House spokesman Sean Spicer told reporters on Monday, in response to a question.
The settlement with Citigroup is the latest of several enforcement actions Cordray has announced in recent weeks. The CFPB last week sued Navient Corp., the largest servicer of student loans in the U.S., and said it’s pursuing wrongdoing at TCF National Bank regarding overdraft fees it charged consumers.
Some CFPB opponents have been recently emboldened by a federal appeals court ruling in October that the agency’s structure is unconstitutional. For example, RD Legal Funding, a hedge fund, is suing the agency for exceeding its authority, citing the October decision, which the CFPB has appealed, and arguing that the agency’s single director structure is unconstitutional.
Of the $28.8 million, Citigroup subsidiaries will pay about $21.4 million to compensate consumers who were wronged and $7.4 million in civil penalties, the CFPB said.
The bank prematurely canceled credit insurance for some borrowers and incorrectly reported some of their account information, the regulator said.
Some of the wrongdoing stretches as far back as 2011 and as recently as 2015, according to a copy of the consent order.