On March 19th, The Office of the Comptroller of the Currency (OCC) levied a $25 million civil money penalty against Citibank for violating the Fair Housing Act. The violation stems from inconsistent issuing of lender credits through their Relationship Loan Pricing (RLP) program. The OCC found that there were control weaknesses related to the program that resulted in eligible mortgage loan customers not receiving an interest rate reduction or a credit to their closing costs. It was deemed that these customers were adversely affected on the basis of their race, color, national origin, or sex. It is a textbook violation of the Fair Housing Act, 42 U.S.C. § 3601—19, and its implementing regulation, 24 C.F.R. Part 100.
The RLP was implemented in August 2011 with a wider implementation across the customer base in February 2012. Under the program, customers who had a qualifying banking relationship with Citibank and applied for eligible mortgages could receive an interest rate reduction or credit towards their closing costs. From August 2011 until April 2015 the bank failed to implement effective risk management and controls which resulted in inadequate training to loan officers, incomplete written guidelines, and faulty policies and procedures. The bank self-reported their findings to the OCC in 2015.
In addition to the $25 million civil money penalty, Citibank has initiated a plan to reimburse an average of $1,000 to approximately 24,000 customers. If you’re reading this, it is very likely that your math skills are strong and you have determined that to be a total of approximately $24 million in restitution or reimbursement. In total, their failure to control weaknesses in this RLP will cost Citibank somewhere in the ballpark of $49 million. That is one expensive training session!
You can read the consent order here https://www.occ.gov/static/enforcement-actions/ea2019-009.pdf