Citigroup has been fined $8.6 million by the Federal Reserve Board for engaging in unsafe banking practices by improperly executing residential mortgage documents.
The penalty, which ends action started in 2010 by the Fed, addresses the deficient execution and notarization of certain mortgage-related affidavits prepared by a non-bank subsidiary, Baltimore-based CitiFinancial Credit Co.
According to the court order of assessment by the Fed:
Citigroup, through CitiFinancial, indirectly engaged in the business of servicing residential mortgage loans made by CitiFinancial.
After a 2010 review of major residential mortgage servicers, federal banking agencies raised concerns that “Citigroup had not adequately assessed the risks associated with residential mortgage loan servicing, foreclosure activities and related functions.”
In 2011, the Fed issued a consent order against Citigroup and CitiFinancial, requiring them to take specific measures to address deficiencies related to mortgage servicing.
Citigroup reported evidence that from January 2015 through August 2015, CitiFinancial employees made assertions about the ownership of the mortgage note, falsely claiming the assertions in the “Lost Note Affidavits” were based on personal knowledge or a review of relevant books and records.
In addition, the Lost Note Affidavits were not properly signed or affirmed in the presence of a notary.
The improper practices were corrected, and CitiFinancial exited the mortgage servicing business in 2017.
The Fed also announced the recent termination of a separate enforcement action from 2011 against Citigroup and CitiFinancial related to residential mortgage loan servicing. The termination of this action was based on evidence of sustainable improvements.
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