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Mortgage

CitiMortgage to pay $7.8 million to California borrowers for not paying interest on escrow accounts

Settlement with state requires servicer to pay 2% interest on impound accounts

More than 94,000 California homeowners will soon get a check from CitiMortgage after the mortgage servicer agreed to pay $7.8 million in overdue interest on customers’ escrow impound accounts as part of a settlement with the state.

The California Department of Business Oversight announced this week that it reached a settlement with CitiMortgage over claims that the servicer did not provide the required interest payments to borrowers who had money set aside in an escrow impound account. These types of accounts are used to pay property taxes and other fees borrowers owe beyond their mortgage payment itself.

California state law requires the servicer to pay 2% interest on the money held in those accounts, but according to the CDBO, CitiMortgage allegedly did not pay that required interest on 94,483 residential mortgages the company serviced dating back to July 1, 2014.

As part of the settlement, CitiMortgage is required to pay the 2% interest to all of those 94,483 borrowers and for all applicable loans going forward.

In total, CitiMortgage will pay out $7.8 million in interest payments to those borrowers.

According to the CDBO, CitiMortgage told the agency that it has been paying interest on residential escrow impound balances since Jan. 1, 2019.

The consent order resolves allegations into CitiMortgage’s mortgage business that California began investigating in 2017.

“This is California consumers’ money and the DBO is pleased CitiMortgage has agreed to abide by the law,” said California Commissioner of Business Oversight Manuel Alvarez.

The settlement document states that CitiMortgage does not admit to any of the findings in the settlement, but notes that “it is the intention and desire of the parties to resolve this matter without the necessity of a hearing and/or other litigation.”

According to the CDBO, CitiMortgage has up to six months to issue checks to the affected borrowers.

HousingWire attempted to contact CitiMortgage, but as of publication time, the company has not responded. This article will be updated should the company respond.

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