A U.S. financial regulator is mulling sanctions against Citigroup Inc (C.N) for denying minority customers the kinds of mortgage discounts that the bank offered to many other borrowers, three people familiar with the probe told Reuters.
While performing a review to ensure it adhered to fair lending standards, Citigroup found that some minority borrowers were not getting the discounts they were due under a program that gives a break on mortgage rates to customers who have large deposits or wealth in the hands of the bank, said the sources.
Citigroup flagged the “relationship pricing” problems last year to its regulator, the Comptroller of the Currency (OCC), said the sources, who were granted anonymity to discuss the regulatory probe, which is not public.
The bank told the OCC that discrepancies in “relationship pricing” were inadvertent and it had taken steps to resolve the issue, they said.
Many lenders use mortgage rate discounts to deepen customer ties, but scrutiny of Citibank’s “relationship pricing’ offer could prompt questions about how other banks run such programs.
The OCC is examining whether Citigroup breached fair lending standards, which prohibit discrimination on the basis of customers’ race, gender, age or religion, the people said.
If the OCC finds wrongdoing, it could fine Citigroup or put it under tighter oversight, among other options, they said.