Citigroup and CitiFinancial Credit Co., a non-bank subsidiary of Citgroup, have agreed to pay a $70 million civil fine as outlined in a cease and desist order issued by the Federal Reserve Board.

The order, announced today, assesses a civil penalty against CitiFinancial and requires the company to pay restitution to certain subprime personal and home mortgage borrowers. Of the $70 million penalty, up to $20 million may be used to make restitution payments to borrowers.

Citigroup and CitiFinancial consented to the order without admitting any allegations. The allegations are in connection with CitiFinancial’s lending activities and its conduct during an examination by the Federal Reserve Bank of New York.

The Reserve Bank has alleged CitiFinancial failed to comply with rules that prohibit a creditor from requiring the signature of a spouse or other person if an applicant qualifies based on his or her own creditworthiness. Additionally, the Reserve Bank alleges CitiFinancial engaged in unsafe and unsound underwriting and lending practices with respect to certain loans subject to the Home Ownership and Equity Protection Act. According to the Reserve Bank, CitiFinancial also allegedly misled examiners in connection with interviews of CitiFinancial employees.

The order requires Citigroup and CitiFinancial to take steps to maintain and enhance compliance with consumer protection laws. Harry Goff, president and CEO of CitiFinancial, said the company has already addressed the three areas of concern through steps such as employee training and updated policies.

“As the leading consumer finance company in North America, CitiFinancial plays a leadership role as a community lender, providing access to credit to those not historically well served in the traditional consumer marketplace,” Goff said. “Over the past three years, CitiFinancial has led the way in implementing best practices that better serve our customers’ needs and meet the highest consumer protection standards. Significant changes have been made to personnel, policies, procedures and controls.”

***

Send tips or a Letter to the Editor to samantha@inman.com or call (510) 658-9252, ext. 140.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×