CitiFinancial Pays $1.35M In Multi-State Settlement

CitiFinancial failed to report to the federal government on 91,127 residential mortgages made between 2004 and 2007, thereby violating the Home Mortgage Disclosure Act (HMDA), state regulators report.

According to Steven L. Antonakes, commissioner of the Massachusetts Division of Banks, the error went undetected by CitiFinancial until auditors from the Massachusetts division discovered the oversight in an examination to determine the company's compliance with state and federal consumer protection laws. The failure to report the loans was caused by an internal systems error.

The 91,000-plus loans represent between 10% and 11% of mortgage transactions during that three-year time frame, Antonakes told reporters Wednesday.

As part of a settlement agreement, CitiFinancial has agreed to remit a $1.25 million penalty to 35 states party to the agreement, which Antonakes said he believes is the largest HMDA settlement ever.

Citi has also submitted corrected reports to the Federal Reserve, per HMDA rules; engaged an independent consultant to perform fair lending reviews to ensure data from the previously unreported transactions do not demonstrate patterns of discriminatory lending practices; and modified its internal controls, Antonakes said.

Antonakes, who was joined on a conference call by regulators from North Carolina, Maryland and Washington, said he does not believe there is evidence of consumer harm involved with the transactions.

"Today's agreement, we believe, goes a long way to ensure� appropriate oversight and controls were in place to avoid a similar occurrence in the future," he stated.

SOURCE: Conference of State Bank Supervisors


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