Patrick Administration Announces 35-State Settlement Agreement with CitiFinancial
Massachusetts Exam Yields Record $1.25 Million HMDA Penalty
The mortgage loans that were omitted from CitiFinancial's HMDA Loan Application Register were originated between 2004 and 2007. The under-reporting of the mortgage loans was apparently caused by an internal systems error at CitiFinancial that went undetected until the Massachusetts examination.
Undersecretary of Consumer Affairs and Business Regulation Barbara Anthony hailed today's 35 state settlement agreement as evidence of states' success in enforcing consumer protection laws.
"Everyone should stand up and take notice that state regulators will not tolerate violations of applicable state and federal laws," said Anthony.
HMDA was enacted in 1975 and requires mortgage lenders to report certain data regarding mortgage loan transactions to the Federal Reserve System. The public data is principally used by regulators to measure how banks are meeting the credit needs of the communities in which they do business and determine whether patterns of potentially discriminatory lending practices are present. Each lender must submit data fields for each mortgage loan application it receives including the following: the loan amount; the location of the property; the race, ethnicity and gender of the borrower(s); and the action taken on the application (whether the loan was approved or denied).
"HMDA remains the primary tool we utilize to ensure compliance with fair lending laws and regulations," said Steven L. Antonakes, the Commissioner of the Massachusetts Division of Banks. "CitiFinancial's failure to accurately report all required mortgage transactions significantly impacted our ability to complete that assessment. 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."
Major terms of the agreement include:
· CitiFinancial already resubmitting corrected and complete HMDA reports to the Federal Reserve System for the years 2004 through 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; and
· CitiFinancial will remit a penalty totaling $1.25 million to the 35 states that are party to this agreement.
The 35 state mortgage regulators included in this settlement agreement are the Massachusetts Division of Banks; the Alabama State Banking Department; the Arizona Department of Financial Institutions; the Connecticut Department of Banking; the Delaware Office of the State Bank Commissioner; the Georgia Department of Banking and Finance; the Hawaii Division of Financial Institutions; the Idaho Department of Finance; the Illinois Department of Financial & Professional Regulation- Division of Financial Institutions; the Indiana Department of Financial Institutions; the Iowa Division of Banking; the Kentucky Department of Financial Institutions; the Louisiana Office of Financial Institutions; the Maine Bureau of Consumer Credit Protection; the Maryland Office of Financial Regulation; the Michigan Office of Financial and Insurance Regulation; the Mississippi Department of Banking and Consumer Finance; the Montana Division of Banking and Financial Institutions; the Nebraska Department of Banking and Finance; the New Hampshire Banking Department; the New Jersey Department of Banking and Insurance; the New Mexico Financial Institutions Division; the New York State Banking Department; the North Carolina Office of the Commissioner of Banks; the Ohio Division of Financial Institutions; the Oregon Division of Finance & Corporate Securities; the Pennsylvania Department of Banking; The Rhode Island Department of Business Regulation; the Tennessee Department of Financial Institutions; the Texas Office of the Consumer Credit Commissioner; the Utah Department of Financial Institutions; the Vermont Department of Banking, Insurance, Securities and Health Care Administration; the Virginia Bureau of Financial Institutions; the Washington Department of Financial Institutions; and the West Virginia Division of Banking.