The CFPB recently entered into consent orders with several Citibank subsidiaries attacking their mortgage servicing practices during the early days of the Mortgage Servicing Rules despite the CFPB’s assurances that early examinations would focus on efforts to comply rather than the technical aspects of compliance. The consent orders require CitiMortgage to pay $17 million to affected consumers and a $3 million civil penalty and require CitiFinancial Services to pay $4.4 million to affected consumers and a $4.4 million civil penalty.
Mortgage servicers should heed these lessons:
1. Loss Mitigation is Not a One Size Fits All Solution. The CitiMortgage Consent Order makes clear there is a right way to handle loss mitigation applications and a wrong way.Specifically, the documentation necessary to complete a loss mitigation application should be tailored to the consumer’s specific application and not include a generic list which may or may not take into account documentation already provided.