Citi to Pay $1.25m Fine for HMDA Report Oversight

CitiFinancial, the personal loan subsidiary of Citigroup (C) will pay a $1.25m penalty for allegedly failing to report 91,127 residential mortgage loans to the federal government as required by the Home Mortgage Disclosure Act (HMDA). According to an investigation by the Massachusetts Division of Banks, the mortgages omitted from CitiFinancial’s HMDA Loan Application Register originated between 2004 and 2007, the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators (AARMR) said in a joint statement (download here). The failure, according to the statement, is the result of an internal systems error at CitiFinancial that went undetected until the Massachusetts Division of Banks began the examination. “HMDA remains the primary tool we utilize to ensure compliance with fair lending laws and regulations. By failing to accurately report all required transactions, [and] CitiFinancial hampered our ability to complete that assessment,” said Massachusetts commissioner of banks Steven Antonakes. “Today’s agreement will ensure that the systems, training, and appropriate oversight and controls are in place to avoid a similar occurrence in the future.” According to the terms of the settlement, in addition to the fine, CitiFinancial will resubmit correct and complete HMDA reports to the Federal Reserve System for the years 2004?2007 and hire an independent consultant to conduct a fair lending review to ensure the data from the previously unreported 91,127 mortgage transactions does not indicate discriminatory lending practices. In addition, CitiFinancial will review and modify its internal control procedures to ensure all reportable HMDA transactions are accurately compiled and reported. The settlement agreement resolves the allegations with 35 state banking agencies. “This settlement highlights the value of state enforcement of federal consumer protection laws,” said Mark Pearce, AARMR president and chief deputy commissioner of the North Carolina Office of Commissioner of Banks. “This settlement demonstrates the ability of state regulators to work together effectively to address our systemic compliance concerns with a large national lender,” Pearce added. Write to Austin Kilgore. The author held no relevant investments.

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