| The Office of the Comptroller of the Currency assessed a $25 million civil monetary penalty against Citibank for violations of the Fair Housing Act.
The OCC determined that the bank lacked proper control over the Relationship Loan Pricing program-- designed to provide eligible mortgage loan customers either a credit to closing costs or an interest rate reduction. As a result of these control weaknesses, some bank borrowers did not receive the Relationship Loan Pricing benefit for which they were eligible and were adversely affected on the basis of their race, color, national origin, or sex, violating the Fair Housing Act, according to the Consent Order from the OCC. The bank has initiated and largely completed a plan to reimburse all customers who did not receive the appropriate RLP benefit, including those customers affected by these violations, and is taking other appropriate corrective action to prevent future violations. The bank will reimburse 24,000 customers a $1,000 each in addition to the civil monetary penalty. [adbutler zone_id="326324"] [adbutler zone_id="326327"] |
According to the Consent Order, in August 2011, the bank piloted a Relationship Loan Pricing program and in February 2012, implemented it across its customer base. Under the program, qualified customers could receive a credit for closing costs or an interest-rate reduction.
Citibank failed to ensure effective risk management and internal controls, including inadequate periodic reviews, over the Relationship Loan Pricing program, including:
- From August 2011 to April 2015, Citibank failed to provide adequate training to loan officers regarding how to offer Relationship Loan Pricing to customers.
- In addition, between August 2011 to November 2014, written guidelines did not explicitly instruct loan officers to offer Relationship Loan Pricing to all eligible customers and the bank didn’t require loan officers to document the basis for the customer’s rejection.
- Also, between August 2011 to January 2015, Citibank didn’t require loan officers to inform customers of all discount programs for which they might qualify.
- As a result of ineffective risk management and control weaknesses, some bank borrowers didn’t receive the Relationship Loan Pricing benefit for which they were eligible and were adversely affected on the basis of their race, color, national origin or sex. After determining in 2014 that some customers hadn’t received the correct Loan Pricing benefit, Citibank self-reported its findings to the OCC in 2015.
