CitiMortgage, Inc. Foreclosure and Claims Process Review

March 12, 2012

FOR: Charles S. Coulter, Deputy Assistant Secretary for Single Family Housing, HU

FROM: Ronald J. Hosking, Regional Inspector General for Audit, 7AGA

SUBJECT: CitiMortgage, Inc. Foreclosure and Claims Process ReviewO’Fallon, MO


As part of the Office of the Inspector General’s (OIG) nationwide effort to review the foreclosure practices of the five largest Federal Housing Administration (FHA) mortgage servicers (Bank of America, Wells Fargo Bank, CitiMortgage, JP Morgan Chase, and Ally Financial, Incorporated), we reviewed CitiMortgage’s foreclosure and claims processes. In addition to this memorandum, OIG issued separate memorandums for each of the other four reviews.1 OIG also plans to issue a summary memorandum reporting the results of all five memorandums. We performed these reviews due to reported allegations made in the fall of 2010 that national mortgage servicers were engaged in widespread questionable foreclosure practices involving the use of foreclosure “mills” and a practice known as “robosigning”2 of sworn documents in thousands of foreclosures throughout the United States. We initially focused our efforts on examining the foreclosure practices of servicers in the judicial States and jurisdictions in which they do business.3

CitiMortgage is a nonsupervised FHA direct endorsement lender that can originate, sponsor, and service FHA-insured loans. During Federal fiscal years 2009 and 20104, CitiMortgage submitted 19,189 FHA claims totaling $2.4 billion.5

CitiMortgage did not halt judicial foreclosures while it reviewed its policies and procedures, like some servicers did in the fall of 2010. According to the November 2010 testimony to Congress of a managing director of CitiMortgage, CitiMortgage believed that there was no reason to suspend its foreclosure process because it had been taking measures to strengthen its practices beginning in the fall of 2009 to ensure that foreclosures were processed correctly. Further, CitiMortgage was reviewing approximately 10,000 affidavits that were executed in pending judicial foreclosures and expected to refile affidavits executed before the fall of 2009.

Separately, CitiMortgage was also reviewing approximately 4,000 pending foreclosure affidavits in judicial States that were executed at its Dallas processing center that may not have been signed in the presence of a notary. CitiMortgage expected that it would refile those affidavits as well.Because we identified potential False Claims Act6 violations, we provided the U.S. Department of Justice (DOJ) with our analyses and preliminary conclusions as to whether CitiMortgage engaged in the reported foreclosure practices.

DOJ used our review and analysis in negotiating a settlement agreement with CitiMortgage. On February 9, 2012, DOJ and 49 States attorneys general announced a proposed settlement of $25 billion with CitiMortgage and four other mortgage servicers for their reported violations of foreclosure requirements. As part of the proposed settlement agreement, each of the five servicers will pay a portion of their settlement to the United States and also must undertake certain consumer relief activities. The proposed settlement agreement described tentative credits that each mortgage servicer would receive for modifying loans, including principal reduction and refinancing, and established a monitoring committee7 and a monitor to ensure compliance with agreed-upon servicing standards and the consumer relief provisions. Once the final settlement agreement has been approved by the court, OIG will issue a separate summary memorandum detailing each of the five servicers’ allocated share of payment due as a result of the settlement agreement.

Our objective was to determine whether CitiMortgage complied with applicable foreclosure procedures when processing foreclosures on FHA-insured loans.

Full report below…



CitiMortgage, Inc. Foreclosure and Claims Process Review

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