CitiMortgage penalized for not paying escrow account interest
CitiMortgage has agreed to pay $7.8 million to more than 94,000 California homeowners for allegedly failing to pay 2% interest on escrow impound accounts, the state's financial regulator said.
California’s Department of Business Oversight said Tuesday that it discovered the failure during a 2017 regulatory exam of the Citigroup mortgage unit.
“This is California consumers’ money and the DBO is pleased CitiMortgage has agreed to abide by the law,” Commissioner of Business Oversight Manuel P. Alvarez said in a press release.
CitiMortgage is not the first lender to be tripped up by California law on escrow accounts. Most homeowners may not even have realized that they were owned money.
State law requires that one- to four-family mortgage lenders that receive money in advance to pay property taxes and insurance premiums must pay homeowners annual interest of 2% on the escrow amounts.
The settlement requires that CitiMortgage pay 2% interest on 94,483 home loan balances dating from July 1, 2014, to Dec. 31, 2018.
The company has been paying interest on residential escrow impound balances since Jan. 1, California’s Department of Business Oversight said, but it may take up to six months to issue checks to all eligible borrowers.
A CitiMortgage spokesman said in a statement: “We are pleased to have the matter resolved.”