More than one year after Citigroup’s $7 billion landmark settlement with the government to resolve a federal investigation into the sale of subprime mortgages, the third report on the bank's progress arrived today.
In July 2014, Citi acknowledged that, over the course of numerous transactions, the bank put together billions of dollars of mortgage-bond deals with loans it knew were defective, and then misrepresented the quality of those mortgage-bond deals to investors who purchased them. Under terms of the settlement, Citigroup agreed to pay $4 billion in civil monetary penalties to the Justice Department, $500 million in compensatory damages to state attorneys’ general and the FDIC, and the remaining $2.5 billion in the form of relief to aid consumers harmed by its conduct.
Thomas Perrelli, a partner with the law firm Jenner & Block who was appointed as independent monitor, released the first report in January 2014, and the second report in May 2015, assessing Citi’s progress toward meeting its obligations by the end of 2018, as the settlement agreement requires. Details of the third report discussed below include an assessment of Citi’s consumer relief efforts through March 31, 2015, and a review of the consumer outreach events that Citi has conducted, to date.
Citi earned the following consumer relief credit for the time period Nov. 22, 2014 through March 31, 2015:
$13,143,520 under Menu Item 1A (first lien principal forgiveness), comprised modifications to 234 loans.
$119,910,186 under Menu Item 2A (credit based on a reduction of a borrower’s mortgage interest rate) for 2,498 claims of relief; and
$29,651,048 under Menu Item 4A (forgiveness of principal associated with a property where foreclosure is not pursued and liens are released) for submitting credit for 636 transactions.
This brings Citi’s total earned consumer relief credit to $162,704,754. In addition, Citi previously earned $13,971,004 in consumer relief credit under Menu Item 4A for the prior period. Accordingly, to date, Citi has cumulatively earned $176,675,758 in consumer relief.
In addition to its consumer relief obligations, Citi must host at least four “Road to Recovery” events each year for the term of the Settlement Agreement 2014 through 2018. The events are intended to ensure that borrowers are informed about their eligibility for relief and have the assistance necessary to apply for such relief.
To date, Citi has hosted eight “Road to Recovery” events in Los Angeles, Dallas, Detroit, Miami, Atlanta, Chicago, Washington D.C., and Philadelphia. Citi has informed the monitor that it intends to host at least one additional event this month in New York
Perrelli said in the report that he will “continue to work with Citi to identify additional markets within the hardest hit areas and participating states for future Road to Recovery events in 2016, 2017, and 2018. The next monitor report to the public on Citi’s consumer relief activity will be issued in the fall of this year.