fined $ 30 million by federal bank regulators after an investigation found
that the bank did not sell foreclosed homes back quickly in the market
Office of the
The Comptroller of the Currency announced on Friday that Citibank was fined $ 30
million for “violations related to the ownership period of other property
According to federal banking regulations, it is a two-year limit
on banks that maintain possession of a foreclosed property. The rules decide
that banks can apply for an annual exemption that can squeeze their ownership to a
property as much as five years.
But after that the bank will sell the property
back into the market to prevent any available housing stock from being kept away
from would be home buyers.
And according to OCC, Citibank violated this rule
holds on to hundreds of coercive sentences longer than the five-year limit.
“The OCC found the bank engaged in repeated breaches
the statutory holding period for OREO, "the OCC said in a statement. "These
violations were due to the bank's deficient processes and controls
identification and monitoring of the OREO content period. In considering this
civil money penalty, OCC found the bank failed to fulfill its obligation to
implement corrective actions, resulting in further violations. "
A brief explanation of the use of the term" OREO "by
OCC: Most people in the housing industry refer to forced nonconformities as REOs, too
property owned, but federal regulators such as the OCC and the Federal Reserve refer to them as OREO,
for other properties owned.
According to the OCC order, an investigation found more than
200 breach of the redundancy sale rule between April 4, 201
and August 14, 2019.
But Citibank states that the problem was limited to them
“Maximum Hold Period for Foreclosed Properties with a
National Bank cannot exceed five years. In some cases, we didn't
fulfill the requirement, "the bank said in a statement.
" The problem, which involved about 200 properties,
was identified in 2015 and it had no impact on our customers, ”says the bank
"Since we identified the problem, we have strengthened
controls, processes and procedures to ensure timely disposition thereof
assets, ”the bank added. – The most important thing was that we worked consistently to ensure
responsible disposition of the properties to avoid adverse effects
real estate market in these communities. ”
As Citibank noted, the problem began in 2015. Accordingly
OCC, in 2015, the bank found that its own processes were "deficient." more
specifically, the bank lacked adequate policies, procedures and processes
effectively identify and monitor the ownership period for OREO assets, ”OCC
OCC stated that Citibank at that time committed to
develop and implement corrective measures to address these shortcomings. ”
However, the bank later submitted several requests to expand
the holding period for REO properties that "was not made timely and resulted
in many more violations, "OCC said.
Then, in April 2017, OCC told Citibank that its internal
controls of REOs remained “decentralized, inefficient and inadequate.” After
Citibank continued to submit "outright requests" to extend REO
And things didn't get much better from there.
"After further efforts to correct the root cause of the continuing violations of the OREO period, the bank continued to implement corrective measures by August 31, 2018," the OCC said. "The bank failed to meet the obligation, resulting in further violations . "
According to OCC, the bank has made progress in dealing with the relevant REOs. In fact, the regulator states that Citibank has" significantly reduced "its REO holdings over the past year.
" OCC continues to monitor the bank's progress with to
implement necessary corrective measures to achieve effective policy,
procedures and processes for identifying and monitoring the holding period for OREO
assets in accordance with law and regulations, ”the OCC stated. "As part of
the bank has reduced significantly over the past twelve months
its portfolio of OREO assets. "
According to OCC, Citibank has already paid the penalty
to Department of Treasury .