C Citigroup Inc

By Yuka Hayashi 

WASHINGTON -- Two mortgage servicing units of Citigroup Inc. agreed to pay $28.8 million to settle allegations from the Consumer Financial Protection Bureau that they mistreated borrowers seeking foreclosure relief.

The federal watchdog agency alleged Monday that CitiFinancial Servicing and CitiMortgage Inc. gave struggling homeowners the "runaround", including keeping borrowers in the dark about options to avoid foreclosure or burdening them with excessive paperwork demands when applying for foreclosure relief.

The settlement calls on the two subsidiaries to refund a combined $21.4 million to affected borrowers and pay $7.4 million in civil penalties.

A Citigroup spokesman said the company was "pleased to resolve these matters."

Monday's action is a sign the CFPB is continuing to pursue an aggressive enforcement agenda despite pressure from congressional Republicans and the Trump administration to rein in its activities. In the past two months, it has filed more than a dozen enforcement actions, sometimes drawing sharp responses from targeted companies denying the bureau's allegations.

"Citi's subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes," CFPB Director Richard Cordray said in a written statement.

The Citigroup case has some resemblance to charges the CFPB made against Navient Corp. in a lawsuit filed Jan. 18. The bureau alleged the nation's largest student loan servicer created obstacles for borrowers to repay their debts by providing inaccurate information and failing to process payments properly. Navient is fighting a civil lawsuit brought the CFPB, saying the allegations were "unfounded."

Write to Yuka Hayashi at yuka.hayashi@wsj.com

(END) Dow Jones Newswires

January 23, 2017 15:34 ET (20:34 GMT)

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