Banking and Finance Law Daily Citibank hit with over $17M in fines for Flood Act violations
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Wednesday, January 22, 2020

Citibank hit with over $17M in fines for Flood Act violations

By Katalina M. Bianco, J.D.

The OCC levied the fines against Citibank for deficient FDPA policies and procedures.

The Office of the Comptroller of the Currency assessed a $17,998,510 civil money penalty against Citibank, N.A., of Sioux Falls, S.D., for violating the Flood Disaster Protection Act (FDPA) and its implementing regulations, specifically 12 CFR 22.7(a). While conducting a compliance examination in 2017, the OCC found that the bank’s FDPA policies and procedures were deficient in relation to its third-party servicers.

According to the consent order, Citibank makes, increases, extends, and renews loans secured by collateral located in a special flood hazard area in which flood insurance is available under the FDPA (Designated Loans) and employs a compliance program to monitor the Designated Loans. As part of the program, Citibank utilized a third-party to service Designated Loans within its residential lending units to notify the borrowers and force place flood insurance when the flood insurance failed to appropriately cover the collateral. During the OCC’s 2017 examination, examiners found Citibank’s policies and procedures allowed its third-party servicer to extend the 45-day period after notification to the borrower resulting in the untimely force placement of flood insurance on Designated Loans. Citibank failed to force place insurance in a timely manner on residential Designated Loans and engaged in a pattern or practice of violations of the FDPA since at least 2014, the OCC determined.

Citibank paid the assessed penalty to the Federal Emergency Management Agency’s National Flood Insurance Program.

Companies: Citibank, N.A.

MainStory: TopStory EnforcementActions FloodInsurance SouthDakotaNews

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