Citigroup will let customers challenge the suspension of home equity loans and provide $120 apiece to some former borrowers whose credit lines were cut or reduced, under the settlement of a lawsuit challenging its second lien practices.
The accord, disclosed over the weekend in documents filed in federal court in San Francisco, resolves a class action lawsuit, that accused the top five ranked lender of improperly suspending or reducing HELOCs to several hundred thousand customers.
Citigroup said it will improve its suspension notices and restore some customers' access to HELOCs under the agreement.
Mortgagors who closed their accounts and were charged a fee are eligible for $120 each under the agreement. It’s unclear how many borrowers that covers. Citigroup agreed to pay $1.2 million to the customers' lawyers.
The settlement requires court approval, and customers seeking the $120 payment will need to submit claims.
During the height of the housing crisis Citigroup and many other lenders suspended or cut HELOC lines – even if the customer was current on their payments.
But in this case Citigroup denied wrongdoing.
In general,
