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Citibank Pays $30M Fine for Slow Foreclosure Processes

To get empty homes into the hands of potential buyers, lenders may hold a foreclosure a maximum of five years – but Citibank allegedly moved too slowly.

NEW YORK – Federal regulators fined Citibank $30 million, saying the bank held onto foreclosed properties too long and kept them from potential buyers.

According to the U.S. Office of the Comptroller of the Currency (OCC), banks can maintain a foreclosure only two years after repossessing the property, though under some circumstances, banks can apply for an annual exemption to hold onto a property for up to five years.

The rule was created so banks would put their properties back into the market quickly. Holding onto foreclosures keeps available housing inventory from reaching potential buyers.

OCC accuses Citibank of holding onto hundreds of foreclosures longer than the maximum five-year allowance.

“The OCC found the bank engaged in repeated violations of the statutory holding period,” the OCC wrote in a statement. “These violations resulted from the bank’s deficient processes and controls in the identification and monitoring of the holding period. In assessing this civil money penalty, the OCC found the bank failed to meet its commitment to implement corrective actions, resulting in additional violations.”

The OCC investigation, which was carried out between April 4, 2017, and Aug. 14, 2019, alleges that Citibank has violated the foreclosure sale rule in more than 200 instances.

“The maximum holding period for foreclosed properties by a national bank may not exceed five years,” Citibank acknowledged in a statement. “In some instances, we did not meet the requirement. The issue, involving approximately 200 properties, was identified in 2015, and there was no impact on our customers. Since identifying the issue, we have strengthened controls, processes and procedures to ensure the timely disposition of these assets. Most importantly, we consistently worked to ensure the responsible disposition of the properties to avoid negatively affecting the real estate market in those communities.”

OCC said that Citibank has already paid the penalty to the Department of the Treasury. It also stated the bank has “significantly reduced its inventory” of foreclosed properties.

Source: “Citibank Fined $30 Million for Holding Onto Foreclosures for Too Long,” HousingWire (Oct. 11, 2019)

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