Citibank to pay $25 million for violating the Fair Housing Act

OCC fines bank $25 million as Citi shells out $24 million in reparation to customers

Citibank will pay out a fine of $25 million for violating the Fair Housing Act, the Office of the Comptroller of the Currency announced Tuesday.

According to the OCC, an investigation showed that Citibank did not equally offer certain mortgage discounts to all Citi customers, thereby “adversely” affecting some customers based on their “race, color, national origin, or sex.”

The OCC stated that Citibank had “certain control weaknesses” in a lending program called “Relationship Loan Pricing,” which offered mortgage discounts to Citi customers.

In the program, Citi customers could receive a credit to their closing costs or an interest rate reduction if they used Citi as their lender. The program was piloted in August 2011 and rolled out widely in February 2012.

But, the OCC found that the bank “failed to ensure effective risk management and internal controls, including inadequate periodic reviews” of the program, which enabled the program to not be offered to all Citi customers equally.

The OCC found that from August 2011 to April 2015, Citibank “failed to provide adequate training to loan officers” about how to offer the RLP program to customers.

Beyond that, from August 2011 to November 2014, Citibank’s written guidelines “did not explicitly instruct loan officers to offer RLP to all eligible customers and the Bank did not require its loan officers to document the basis for the customer’s rejection.”

Additionally, through January 2015, the bank did not require its LOs to inform customers about all the discount programs they may be eligible for.

As a result of the bank’s “ineffective risk management and control weaknesses,” certain borrowers did not receive the RLP discounts they were eligible for and were “affected on the basis of their race, color, national origin, and/or sex.”

According to the OCC, Citibank self-reported the issue to the OCC in 2015. Then, last year, the OCC told the bank that its actions were a violation of the Fair Housing Act.

As a result of its findings, the OCC is ordering Citibank to pay a civil penalty of $25 million.

According to Citi, the issue affected a small percentage of its customers and had no discriminatory basis whatsoever.

“In 2014, Citi self-identified some errors in the program’s implementation in which a small percentage of mortgage customers did not receive the benefit for which they were eligible, either receiving no benefit or one that was smaller than they should have," Citi said in a statement provided to HousingWire.

“The errors affected borrowers across gender, race and ethnicity. Citi has no tolerance for discrimination in any form," the bank continued. "Across its products, Citi provides equal access and opportunity for credit for applicants, regardless of race, ethnicity and gender and is committed to ensuring that customers are treated fairly."

According to Citi, the bank self-reported the issue, conducted a "comprehensive" review, and "strengthened processes and controls to help ensure correct implementation going forward."

"We continue to closely monitor implementation and, if we identify an instance in which an eligible customer does not receive the full benefit of relationship pricing as intended, we will act promptly to correct," the bank added. "We apologize to our customers for the errors and are pleased to have the matter resolved.”

In addition, Citibank also initiated and “largely completed” a reimbursement plan to compensate all of the customers who did not receive the RLP benefit, as they should have.

According to the OCC, Citibank will provide reimbursement of approximately $24 million to 24,000 customers as a result of the bank’s “failures and control weaknesses.”

[Update: This article is updated with a statement from Citi. Additionally, the headline now accurately reflects the amount of the fine from the OCC.]

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