Washington State Department of Financial Institutions

News Release

Wednesday, March 24, 2010


Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters@dfi.wa.gov

Deborah Bortner, Director of Consumer Services
PH (360) 902.8703 dbortner@dfi.wa.gov


Washington Part Of 35-State Settlement With CitiFinancial

Record penalty assessed for failure to report residential mortgage loans

OLYMPIA – The Washington State Department of Financial Institutions joins the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) in announcing a 35-state settlement agreement (PDF)* in which CitiFinancial agreed to remit a $1.25 million penalty.

The agreement between CitiFinancial and state mortgage regulators was executed after an examination conducted by the Massachusetts Division of Banks to determine compliance with state and federal consumer protection laws. The examination found that CitiFinancial had failed to report 91,127 residential mortgage loans to the federal government, as required by the Home Mortgage Disclosure Act (HMDA). The mortgage loans that were omitted from CitiFinancial’s HMDA Loan Application Register (LAR) were originated between 2004 through 2007. According to CitiFinancial, the underreporting of the mortgage loans was caused by an internal systems error at CitiFinancial that went undetected until the Massachusetts examination. As 1,797 loans were originated here, Washington is expected to receive $32,816.18 of the penalty.

“State financial regulators are at the forefront of protecting borrowers from discriminatory lending practices. Reviewing this information yearly is one of DFI’s means of testing whether a company is treating our citizens fairly and not making discriminatory loans” Scott Jarvis, Director of DFI said. “It is simply not acceptable that this important information was not available for a period of years. “

Major terms of the agreement include:

“This settlement is one in a long history of cases that highlights the value of state enforcement of federal consumer protection laws,” said Deborah Bortner, DFI Director of Consumer Services and AARMR Board member. “Cases like this demonstrate that state regulators can and do work together effectively to address compliance concerns with large national lenders.”

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).

The 35-State mortgage regulators included in this settlement agreement are:

Alabama State Banking Department
Arizona Department of Financial Institutions
Connecticut Department of Banking
Delaware Office of the State Bank Commissioner
Georgia Department of Banking and Finance
Hawaii Division of Financial Institutions
Idaho Department of Finance
Illinois Department of Financial Professional Regulation-Division of Banking
Indiana Department of Financial Institutions
Iowa Division of Banking
Kentucky Department of Financial Institutions
Louisiana Office of Financial Institutions
Maine Bureau of Consumer Credit Protection
Maryland Office of Financial Regulation
Massachusetts Division of Banks
Michigan Office Financial and Insurance Regulation
Mississippi Department of Banking and Consumer Finance
Montana Division of Banking and Finance
Nebraska Department of Banking and Finance
New Hampshire Banking Department
New Jersey Department of Banking and Insurance
New Mexico Financial Institutions Division
New York State Banking Department
North Carolina Office of the Commissioner of Banks
Ohio Division of Financial Institutions
Oregon Division of Finance & Corporate Securities
Pennsylvania Department of Banking
Rhode Island Department of Business Regulation
Tennessee Department of Financial Institutions
Texas Department of Savings and Mortgage Lending
Utah Department of Financial Institutions
Vermont Department of Banking, Insurance, Securities and Health Care Administration
Virginia Bureau of Financial Institutions
Washington Department of Financial Institutions
West Virginia Division of Banking

About Consumer Services
www.dfi.wa.gov/cs ▪ 360.902.8703 ▪ 877.RINGDFI (746.4334)
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as "payday lenders." The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

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