The consumer lending arm of Citigroup Inc. will pay $1.25 million for failing to report to federal regulators on more than 90,000 mortgage loans that it made.
CitiFinancial agreed to the penalty in a settlement with 35 state mortgage regulators announced Wednesday by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
The agreement followed an examination by the Massachusetts Division of Banks on CitiFinancial's compliance with state and federal consumer laws. That examination found the bank had failed to report 91,127 residential mortgage loans originated between 2004 and 2007.
The Home Mortgage Disclosure Act requires all mortgages be reported. These reports are used to ensure compliance with fair lending laws and regulations.
The failure to report the loans was apparently caused by an internal systems error at CitiFinancial that went undetected until the Massachusetts review, the state regulators said.
In addition to the penalty, CitiFinancial agreed to resubmit corrected and completed reports to the Federal Reserve for 2004 to 2007, and to contract an independent review of the unreported transactions to make sure the data does not demonstrate a pattern of discriminatory lending practices.
The penalty will be divided between the 35 state mortgage regulators that are part of the agreement. They are in the following states: Alabama, Arizona, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington and West Virginia.
In afternoon trading, Citigroup shares added 3 cents to $4.16. The stock has ranged between $2.25 and $5.43 in the past year.
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