Consumer complaint received 2016-10-21
Company: CITIBANK, N.A.
State: NH
Product: Mortgage
Sub-product: FHA mortgage
Issue: Loan modification,collection,foreclosure

Complaint:
In 2013, after going through job changes and while in the process of a divorce, I reached out to Citimortgage in order to find a solution to keep my home. My income had changed dramatically and there was no way I was going to be able to continue making the existing payments under my new income. 

Citimortgage offered me a " loan modification '' and explains that it 's essentially a refinance. They have you fill out what looks like application paperwork and start you out on " trial period '' payments, telling you those are going to be your new payments and what your new interest rate is going to be once the modification is approved. They lead you to believe that the lower payment amount is the result of your new, lower interest rate and make absolutely no mention anywhere that this is all contingent on you taking out a second mortgage from HUD. 

Citimortgage then had me make the " trial period '' payments for 4-6 months. They do n't apply any of that money to the existing account, which kills your credit score because they are reporting you as not making any payments to the credit bureaus ( they do disclose that this could happen ). 

Once they 've got you backed into a corner where you ca n't refinance with anyone else because you 've sufficiently damaged your credit - they send you paperwork for taking out a HUD loan and tell you you either have to take it, or they will begin foreclosure - because you have n't been making any payments on the original loan. They give you very little time to review the documentation and almost no explanation of what it is. They hold all the " trial period '' payments in escrow and only apply them once they " approve '' you for the loan modification they originally pitched to you as a refinance. 

A few months after they get paid from HUD on the second mortgage they essentially force you into taking out, they " approve '' you for the loan modification and send you your new payoff amount. You think it looks great because they make it sound like they finally applied all that money you 've been paying for almost a year and a half. The payoff amount does n't reflect the $ XXXX loan they tricked you into taking out - that 's not payable until the loan is paid off, and is a lump sum payment. 

So you are led to believe that even if you do have XXXX mortgages you are paying them off and they are all part of the payoff they are showing you. In reality that second mortgage is completely separate and never gets a dime paid to it. This was n't made apparent until I recently sold my house. The title company handling the closing called me and informed me I had a second mortgage and my payout would be approximately {$50000.00} less than I thought based on the payoff amount I was seeing on my account from Citimortgage. 

Not a single piece of paper Citimortgage sent me when I started the process mentioned that I would have to take out a second mortgage in order to get those lower payments. This is a clear violation of Truth in Lending rules and is deceitful and predatory on the part of Citimortgage. This is not a matter of not understanding what I was offered - it is a matter of having no other option but to take what was put in front of me or end up losing my home. It is clearly entrapment on their part.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation