OFIR Announces Settlement with CitiFinancial Regarding Mortgage Disclosure Violation


LANSING, MI – March 25, 2010 – (RealEstateRama) — The Office of Financial and Insurance Regulation (OFIR), the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) today announced a settlement with CitiFinancial regarding the firm’s failure to report 91,127 residential mortgage loans, including more than 4,000 in Michigan, to the federal government as required by the Home Mortgage Disclosure Act (HMDA). The settlement requires CitiFinancial to pay a $63,457 penalty to the State of Michigan, which will be put into the Mortgage Brokers, Lenders, and Servicers Licensing Act Fund and used to support OFIR’s mortgage examination and licensing programs.

“This settlement underscores the importance of state regulators enforcing federal consumer protection laws,” OFIR Commissioner Ken Ross said. “HDMA compliance ensures that Michigan consumers are protected from discriminatory and predatory loan practices.”

OFIR’s agreement with CitiFinancial is part of a 35-state settlement which requires the firm to pay state regulators a total of $1.25 million.

The residential mortgage loans that were omitted from CitiFinancial’s HMDA Loan Application Register were originated between 2004 and 2007. The failure to report the loans was apparently caused by an internal systems error at CitiFinancial.

Major terms of the agreement include:

* CitiFinancial already resubmitting corrected and complete HMDA reports to the Federal Reserve System for the years 2004‐2007.
* CitiFinancial engaging an independent consultant to conduct a thorough fair lending review to ensure the data from the previously unreported 91,127 mortgage transactions does not in any way demonstrate a pattern or practice of discriminatory lending practices.
* CitiFinancial will thoroughly review and substantially modify its internal control procedures to ensure all reportable HMDA transactions are accurately compiled and reported.

State regulators have significantly enhanced multi-state cooperation in recent years through projects such as the development and launch of the CSBS/AARMR Nationwide Mortgage Licensing System (NMLS) and the creation of the Multi‐State Mortgage Committee to provide seamless supervision of mortgage companies operating in more than one state.

The HMDA was enacted by Congress in 1975 and is implemented by the Federal Reserve Board’s Regulation C. This regulation provides the public loan data that can be used to assist:

* in determining whether financial institutions are serving the housing needs of their communities;
* public officials in distributing public-sector investments so as to attract private investment to areas where it is needed;
* and in identifying possible discriminatory lending patterns

Jason Moon 517-335-1700


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Brittany Hickman

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