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Appendix 1 –
Narrative Summary
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Paragraph 6 – CitiFinancial Activities1
(6) Within 60 days of this Order, CitiFinancial shall submit to the Reserve Bank an
acceptable written plan for strengthening coordination of communications with
borrowers, both oral and written, related to Loss Mitigation and foreclosure
activities to ensure that communications are timely and effective, are designed to
avoid confusion to borrowers, to ensure continuity in the handling of borrowers’
loan files during the Loss Mitigation and foreclosure processes by personnel
knowledgeable about the borrower’s situation, and to ensure that decisions
concerning Loss Mitigation options or programs continue to be made and
communicated in a timely fashion. Prior to submitting the plan, CitiFinancial shall
conduct a review to determine (i) whether processes involving past due mortgage
loans or foreclosures overlap in such a way that they may impair or impede a
borrower’s efforts to effectively pursue a Loss Mitigation option or program, and
(ii) whether employee incentive compensation practices discourage Loss Mitigation.
The plan shall provide for at least the same level of coordination of communications
with borrowers as the level that the Bank and CitiMortgage are required to
maintain in their consent order with the OCC.
Introduction to CitiFinancial’s Residential Mortgage Loan Servicing Activities
CitiFinancial’s community-based business model consists of approximately 1,300 fullservice branches with an average of three employees each and approximately 160
servicing centers2 with an average of eight employees each. CitiFinancial branches deal
directly with borrowers and provide personalized service. CitiFinancial’s relationship
with the borrower begins with the loan closing, which is conducted in person at the
borrower’s local branch and gives borrowers a chance to meet the branch employees.
Some borrowers elect to make their loan payments in person at the branch, and others
speak with branch employees by telephone on a regular basis.
1
Terms used herein and not otherwise defined shall have the same meaning as defined in the FRB Order.
We respectfully request, pursuant to 5 U.S.C. § 552(b) and 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8), that
confidential treatment be accorded this enclosure, and the confidential and privileged business, commercial,
and financial information it contains, as well as any transcripts, notes, memoranda, or other records created
by, or at the direction of, the Federal Reserve Bank of New York, its officers, or staff that reflect or relate
to this confidential information. We also respectfully request that you promptly inform us of any request
under the Freedom of Information Act seeking access to any of the information enclosed herewith, to
permit us to substantiate the grounds for confidential treatment.
We further note that this enclosure is protected by legal privileges, including but not limited to the
attorney-client and work product privileges. In accordance with 12 U.S.C. § 1828(x), we do not waive, and
expressly preserve, all such privileges and protections.
2
While full-service CitiFinancial branches originate and service mortgage loans, CitiFinancial servicing
centers currently only service loans. CitiFinancial converted the majority of these servicing centers from
full-service branches in order to meet local needs. For ease of reference, servicing centers and full-service
branches will both be referred to as branches.
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As early as a borrower’s first missed payment, branch employees communicate with the
borrower by phone, by mail, or via face-to-face discussions at the branch to explore the
reasons for the delinquency and to assess different Loss Mitigation possibilities.
CitiFinancial’s physical proximity to the borrower and the established relationship with
the borrower facilitate conversation. If the borrower wants to explore any Loss
Mitigation opportunities, CitiFinancial branch employees are available to guide the
borrower through the Loss Mitigation process from start to finish.
CitiFinancial branch employees work to ensure that borrowers are given the opportunity
to utilize Loss Mitigation to avoid foreclosure through extensive outreach and follow-up
with borrowers. CitiFinancial’s network of community-based branch offices services
mortgage loans until a loan reaches a stage of serious delinquency where Loss Mitigation
efforts by the branch have been unsuccessful at preventing the loan from moving toward
foreclosure. Once the CitiFinancial recommendation to proceed with foreclosure is
approved by CitiMortgage, the servicing of the account is transferred to CitiMortgage
specialists in residential mortgage loan servicing, Loss Mitigation, and foreclosure
activities, generally at 90 days delinquency.3 Once CitiFinancial transfers the servicing
of the account to CitiMortgage, borrowers must communicate directly with CitiMortgage,
which conducts further Loss Mitigation and foreclosure activities in accordance with its
strengthened policies and procedures as set forth in its response to the OCC Order. The
Loss Mitigation opportunities available to borrowers through CitiFinancial will continue
to be available to CitiFinancial borrowers through CitiMortgage.
CitiFinancial has implemented enhanced policies and procedures for the oversight of
3
Most CitiFinancial accounts going into the foreclosure process are electronically “swept” from the
CitiFinancial branch into the centralized CitiMortgage operation for further servicing at about 90 days
delinquent, but there are situations for which the timing of the sweep is different. The foreclosure process
starts with the CitiFinancial branch preparing a Foreclosure Analysis Review package concerning a
seriously delinquent mortgage account. The package is forwarded to the CitiFinancial Foreclosure Support
Group for further equity analysis no later than the fifth working day of the month in which the account
reaches 60 days past due. By the end of that month, CitiFinancial forwards the package, including the
equity analysis and a recommendation to foreclose, to the CitiMortgage Pre-Foreclosure Group, which
reviews the package and determines whether to proceed with CitiFinancial’s recommendation to foreclose.
If CitiMortgage determines to proceed with CitiFinancial’s recommendation to foreclose, the account is
placed on a weekly sweep report, which results in the account being electronically swept from the branch
and into CitiMortgage for further handling. The actual sweep usually occurs in the month when the
account is 90 days delinquent. Exceptions to this timing may occur in several situations. If a bankruptcy
indicator is placed on a mortgage account, the account is swept into CitiMortgage’s Bankruptcy Group in
the month in which the bankruptcy indicator is placed, regardless of the delinquency status. Certain states
have implemented requirements that borrowers receive a “notice of intent to foreclose” letter, which
prohibits initiation of foreclosure for a specified time period. In those states, the foreclosure process is put
on hold until after the expiration of the time period during which the borrower may take steps to cure the
delinquency. Similarly, the foreclosure process is put on hold if the borrower has undertaken a
modification or other Loss Mitigation effort with CitiFinancial. In the case of bankruptcy, the account may
be swept before 90 days delinquency and, in the latter two situations, the borrower is allowed further time
to pursue mitigation options and the account may not be swept to CitiMortgage or may sweep at a later
date. CitiFinancial will also oversee CitiMortgage’s handling of any CitiFinancial account being serviced
in CitiMortgage’s centralized operation if the foreclosure process is suspended for any reason.
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CitiMortgage’s foreclosure activities as described in CitiFinancial’s May 26, 2011
response to Paragraph 7 of the FRB Order. Separately from the oversight described
therein, and in addition to the requirements of the FRB Order, CitiFinancial will develop
a plan for oversight of CitiMortgage’s residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities. This oversight will be implemented in connection
with a service-level agreement (“SLA”) that will also contractually obligate CitiMortgage
to adhere to CitiFinancial’s servicing standards and provide information to allow
CitiFinancial to oversee adherence to these standards. The SLA will be implemented by
July 31, 2011, and CitiMortgage has represented to us that it will negotiate and enter into
an SLA with CitiFinancial by that date.
Communications with Borrowers
In response to Paragraph 6 of the FRB Order, CitiFinancial Compliance, Legal, and
Operations staff conducted a review of CitiFinancial’s residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities to determine whether processes
involving past due mortgage loans or foreclosures overlap so as to impair a borrower’s
ability to avoid foreclosure. The review consisted of a review of CitiFinancial’s relevant
policies and procedures, branch training materials, standard customer letters, and billing
statements, as well as interviews with key business managers. In the course of this
review, CitiFinancial found areas in which it could augment its policies and procedures to
strengthen the coordination of communication with borrowers related to Loss Mitigation
and foreclosure activities.
CitiFinancial is committed to providing its customers with the highest level of customer
service and to meeting its obligations to borrowers, including improved communication
with the borrower whose account is being transferred to CitiMortgage with a foreclosure
recommendation. CitiFinancial has a number of policies and procedures designed to
communicate effectively with borrowers regarding Loss Mitigation activities, and it has
developed a plan to strengthen those policies and procedures. Among other
enhancements, CitiFinancial will:
x
Improve communications with the borrower at the time servicing of an account is
transferred to CitiMortgage by providing information regarding the reason for the
account transfer; contact information for CitiMortgage Default Servicing; and the
availability of Loss Mitigation opportunities with CitiMortgage. In addition, if a
borrower calls a CitiFinancial branch after the servicing of the account has been
transferred to CitiMortgage, the CitiFinancial branch employee will contact
CitiMortgage with the borrower on the line, subject to the borrower’s permission,
to transfer the call to CitiMortgage Default Servicing.
x
Enhance policies and procedures to prohibit the transfer of servicing to
CitiMortgage when borrowers are actively engaged in Loss Mitigation activities
with CitiFinancial, which may include short-term or long-term modification,
waiver of fees, short sale, or deed-in-lieu. This prohibition will also apply during
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the pendency of any borrower complaint concerning denial of a Loss Mitigation
request.
x
Augment policies and procedures to designate the Branch Manager of each
CitiFinancial branch as the single point of contact for borrowers whose accounts
are serviced by that branch and who request Loss Mitigation. Written
communications with borrowers who request Loss Mitigation will contain the
name and contact information of their Branch Manager, along with information
for borrowers to contact other CitiFinancial branch employees in the event the
Branch Manager is unavailable.
x
Enhance existing policy to require Branch Managers to send borrowers who are
denied second mortgage modifications a written notice of adverse action within
48 hours of the decision.
x
Reclassify training with respect to mortgage delinquencies, Loss Mitigation, and
loan modification from “suggested” to “required,” and require all employees to
complete these programs within the first six months of employment.
x
Augment the CitiFinancial customer self-service website with the toll-free
number for CitiFinancial’s Customer Complaint Hotline, which borrowers may
call to file or escalate complaints regarding Loss Mitigation, loan modification, or
foreclosure activities.
x
Augment the HUD Homeownership Counseling letter to include additional
language with respect to loan modification options and the potential for
foreclosure.
x
Draft and implement policy to ensure that all CitiFinancial junior liens are taken
into consideration when an analysis of a loan modification request begins on the
CitiFinancial first mortgage.
x
Augment policies and procedures to require CitiFinancial Branch Managers to (1)
send any borrower who requests Loss Mitigation a letter within 48 hours of the
request explaining the required documentation and notifying the borrower of the
deadline for submitting required documentation and (2) notify borrowers of
CitiFinancial’s Loss Mitigation decisions orally within 10 days of the decisions.
x
Monitor customer complaints concerning Loss Mitigation and establish key risk
indicators that will trigger targeted reviews of branches.
Implementation of this plan will require the involvement of several teams within
CitiFinancial, including Risk, Operations, Compliance, Legal, Home Office Credit,
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Finance, and Business Services.4 As CitiFinancial implements this plan, it will evaluate
appropriate MIS enhancements to monitor compliance with the plan’s requirements.
Compensation Policies
CitiFinancial also conducted a review of its employee incentive compensation practices
to determine whether CitiFinancial’s compensation practices in any way discourage Loss
Mitigation. CitiFinancial Compliance and Legal staff reviewed the branch employee
incentive compensation plans and met with key members from the Incentives Department
to ask specific questions related to how, if at all, Loss Mitigation efforts by branch
employees are impacted by the incentive compensation structure. The review confirmed
that employee incentive compensation practices do not discourage Loss Mitigation efforts
in any way. As described below, the CitiFinancial incentive program is designed to
reward positive performance from both a sales and a servicing perspective. Effective
delinquency control is only possible if the branch employees work diligently with
borrowers to exhaust all possible Loss Mitigation options in an attempt to prevent
foreclosure. The results of the review were shared with the business, including Branch
Operations, and no further action in the way of process changes or remediation was
necessary to comply with the FRB Order.
Loss Mitigation efforts are the responsibility of CitiFinancial branch employees, which
include a Branch Manager, a Branch Account Manager, and one or more Branch Account
Executives. Branch employees receive a base salary and may receive incentive
compensation based upon branch and individual performance.
CitiFinancial’s incentive compensation system takes into account a number of factors,
including loan delinquencies and branch profitability. Branch employees’ incentive
compensation is negatively affected when loans serviced by the branch are delinquent
and when the branch incurs losses as a result of foreclosures. To the extent that
CitiFinancial branch employees successfully engage in Loss Mitigation efforts, their
compensation is affected positively because their branch has fewer delinquent loans and
avoids losses as a result of foreclosures.
Staffing Review
CitiFinancial regularly assesses its branch staffing levels to ensure that branches have
adequate staff to meet their borrowers’ needs, including with respect to Loss Mitigation
and loan modification requests. CitiFinancial determines the appropriate number of
employees per branch based on a number of historical data points, including the time it
takes to lend, collect, and service accounts; current loan and delinquency volumes; and
the number of customers who are enrolled in automatic payments. CitiFinancial’s
analysis of these data points shows that one employee for every 360 accounts, the
majority of which are personal loan accounts, is sufficient to meet its borrowers’ needs.
4
Implementation of all enhanced policies, procedures, or programs under this plan will be completed in the
CitiFinancial Online Manual on or before August 11, 2011. All interim implementation dates will be
referred to in the Action Plan.
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CitiFinancial’s current staffing levels average approximately 60 mortgage loan accounts
per employee. Based on these assessments, CitiFinancial’s current staffing levels are
deemed to be sufficient to implement fully each of the enhancements set forth in this
response.
*
*
*
*
*
In order to ensure that CitiFinancial’s plan will maintain at least the same level of
coordination of communications with borrowers as the level that CBNA and
CitiMortgage are required to maintain under the OCC Order, CitiFinancial has carefully
reviewed its practices to determine what process improvements, policies and procedures,
or other enhancements are necessary and appropriate to comply with the OCC Order. For
ease of reference, we describe below CitiFinancial’s processes and planned
improvements to processes for coordination of communications with borrowers in
accordance with the specific requirements of Article IX of the OCC Order.
Article IX(1)
(a)
Measures to ensure that staff handling Loss Mitigation and loan
modification requests routinely communicate and coordinate with staff processing
the foreclosure on the borrower’s property.
CitiFinancial has determined that there are certain ways in which it can enhance its
existing policies and procedures to ensure that information regarding borrowers is
communicated to the staff at CitiMortgage that is responsible for processing the
foreclosure on the borrower’s property, and that the servicing of a loan account is not
transferred to CitiMortgage while Loss Mitigation is pending.
Each CitiFinancial branch office has access to a centralized computer system (“
that contains information regarding the borrower, including account information and
servicing notes on the status of collections; background on any repayment difficulties;
and information regarding Loss Mitigation opportunities available to each borrower.5
This system allows CitiFinancial branch employees to gather information quickly and
reach out to borrowers whenever borrowers miss a payment to discuss available Loss
Mitigation opportunities, which may include short-term or long-term modification,
waiver of fees, short sale, or deed-in-lieu. In the event that any CitiFinancial branch
employee makes contact with a delinquent borrower, orally or in writing, information
relating to such contact, including discussions regarding Loss Mitigation opportunities, is
noted in the
system.
At least two days before CitiFinancial transfers any loan account to CitiMortgage for
servicing, Branch Managers are provided with a systemically generated list of all
accounts that are about to be transferred. Branch Managers are able to see any notes in
the
system made by CitiFinancial employees regarding Loss Mitigation, and
5
CitiFinancial is in the midst of replacing
functionality for all relevant purposes.
with a new information system with the same
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Branch Managers have the ability to place a “hold” on accounts to prevent them from
being transferred to CitiMortgage.
In order to ensure that servicing of a loan account is not transferred to CitiMortgage
while borrowers are engaged in Loss Mitigation with CitiFinancial, CitiFinancial will
augment its policies and procedures to direct Branch Managers to place a hold on any
account where the borrower is actively pursuing Loss Mitigation with CitiFinancial. To
ensure that Branch Managers appropriately place these holds, CitiFinancial District
Managers will be required to review accounts set to be transferred to CitiMortgage for
servicing and submit their approval prior to the transfer. As a result of the hold, the
servicing of the account will not be transferred to CitiMortgage unless and until (1)
CitiFinancial has made a determination that the borrower is not eligible for the
borrower’s requested Loss Mitigation opportunity; or (2) the borrower confirms in
writing that he or she is no longer interested in pursuing Loss Mitigation; or (3) the
borrower has ceased pursuing Loss Mitigation.6 Furthermore, CitiFinancial will augment
its policies and procedures to direct Branch Managers to place a hold on a borrower’s
account until any complaint concerning denial of a Loss Mitigation request is addressed.
If the servicing of the account is transferred to CitiMortgage, CitiMortgage Loss
Mitigation and foreclosure staff have access to the history of Loss Mitigation efforts
undertaken by CitiFinancial with respect to the borrower. CitiMortgage uses the
software system to collect information contained in the
system and present it to
the Loss Mitigation and foreclosure staff. Per existing policy, in the event that
CitiFinancial receives an inquiry from a borrower after servicing of the borrower’s
account has been transferred to CitiMortgage, CitiFinancial requires branch employees to
provide the borrower with the toll-free number of CitiMortgage Default Servicing.
CitiFinancial will augment its policies and procedures to require that, when a borrower
calls a CitiFinancial branch after the servicing of the account has been transferred to
CitiMortgage, the CitiFinancial branch employee will contact CitiMortgage with the
borrower on the line to transfer the call to CitiMortgage Default Servicing. Should the
borrower call CitiMortgage Default Servicing and express interest in a Loss Mitigation
program, CitiMortgage will assign the borrower a single point of contact and identify
secondary points of contact in the event the primary point of contact is unavailable in
accordance with its procedures outlined in the response to Article IX(1)(c) below.
CitiFinancial will implement quality control testing to ensure that Branch Managers
appropriately place holds on accounts to prevent them from transferring to CitiMortgage
when Loss Mitigation is pending. This testing will be added to the existing Branch SelfAssessment (“BSA”), Center Self-Assessment (“CSA”), Center Manager Review
(“CMR”), and District Manager Review (“DMR”) programs. The BSA and DMR
support the CitiFinancial full-service branches, and the CSA and CMR support the
CitiFinancial servicing centers. Full-service branches perform a BSA monthly and a
DMR semi-annually in accordance with the program designed by the Compliance
6
CitiFinancial will consider a borrower to have ceased pursuing Loss Mitigation when the borrower fails to
respond to CitiFinancial’s request for borrowers to provide or execute necessary documents within 30 days
of when the borrower initiated the Loss Mitigation request.
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Department to verify compliance with company policies surrounding branch
management. Servicing centers perform a CSA monthly and a CMR quarterly, both of
which include tests similar to the BSA and CSA. The results of these self-assessments
and reviews are tracked by the Compliance Department.
The Branch Audit team will also add to its existing branch audits a review of whether
Branch Managers appropriately place holds on accounts to prevent the servicing of those
accounts from being transferred to CitiMortgage when Loss Mitigation is pending. The
Branch Audit team performs on-site, independent audit and control reviews of each
branch to ensure compliance with consumer protection laws and company policies and
procedures. The Branch Audit team conducts reviews of CitiFinancial branches every 12
to 30 months. The frequency of the reviews depends on a number of risk factors,
including accounts per employee, participation in training programs, and prior audit
results. The Branch Audit team establishes and tracks required corrective action,
including timelines for implementation of such corrective action, and presents monthly
reports on branch compliance to senior management, including field management, and
CitiFinancial’s Chief Compliance Officer and General Counsel.
(b)
Appropriate deadlines for responses to borrower communications and
requests for consideration of Loss Mitigation, including deadlines for decisionmaking on Loss Mitigation Activities, with the metrics established not being less
responsive than the timelines in the HAMP program.
Due to CitiFinancial’s community-based business model, CitiFinancial branch employees
are able to devote personal attention to borrowers as soon as borrowers miss a payment.
CitiFinancial branch employees proactively reach out to borrowers, both orally and in
writing, to assist with the Loss Mitigation process from document collection to execution.
Once a borrower completes the paperwork necessary for a Loss Mitigation request,
CitiFinancial uses an automated, centralized system to make decisions regarding the
borrower’s request. As a result of these processes, CitiFinancial typically provides
borrowers with oral preliminary decisions—subject to receipt of required and verified
documentation—on borrowers’ Loss Mitigation requests within 48 hours of the request,
which is well within the timelines of the HAMP program.
CitiFinancial branch employees typically place a number of phone calls to borrowers
reminding borrowers to submit required documentation. As a result, borrowers are likely
to respond quickly and obtain a decision on their Loss Mitigation request within
timeframes that are well within HAMP Guidelines. CitiFinancial will augment its
policies and procedures to require Branch Managers to send any borrower who requests
Loss Mitigation a letter within 48 hours of the request explaining the required
documentation and notifying the borrower of the pending 30-day deadline for submitting
required documentation. This letter will contain a telephone number and address for the
borrower to reach his or her Branch Manager for assistance, as well as information for the
borrower to contact other CitiFinancial branch employees if the Branch Manager is
unavailable.
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CitiFinancial’s approach to soliciting documentation from borrowers in order to make a
decision on Loss Mitigation has been an effective tool in reducing the time periods within
which decisions on a Loss Mitigation request are made. This benefits borrowers by
helping them to avoid harm to their credit as the result of lengthy delinquency. Given its
approach to ensure timely decisions on Loss Mitigation requests, CitiFinancial believes
its processes are at least as responsive as those specified by the HAMP Guidelines,
although specific timelines may differ.
As a general practice, CitiFinancial branch employees communicate Loss Mitigation
approvals to borrowers orally within 48 hours of CitiFinancial’s decision. CitiFinancial
will augment its policies and procedures to require formally that Branch Managers
communicate all final Loss Mitigation decisions to borrowers orally within 10 days of
such decision.
CitiFinancial’s policies and procedures require that borrowers who are denied first
mortgage modifications are sent a written notice of adverse action within 48 hours of the
decision. CitiFinancial will improve these policies and procedures to require Branch
Managers to send borrowers who are denied second mortgage modifications a written
notice of adverse action within 48 hours of the decision.
CitiFinancial will implement quality control testing to ensure that Branch Managers send
borrowers timely letters explaining Loss Mitigation documentation requirements,
timelines, and decisions. This testing will be added to the existing self-assessment and
review programs. The results of these tests are tracked by the Compliance Department.
In addition, the Branch Audit team will add to its existing branch audits a review of
whether Branch Managers send borrowers timely letters explaining Loss Mitigation
documentation requirements, timelines, and decisions. The Branch Audit team
establishes and tracks required corrective action and presents monthly reports on branch
compliance to senior management, including field management, and CitiFinancial’s
Chief Compliance Officer and General Counsel.
Once the servicing of an account is transferred to CitiMortgage, CitiMortgage will
evaluate all Loss Mitigation and loan modification requests according to its policies and
procedures. CitiMortgage’s policies and procedures applicable to Loss Mitigation
programs mandate responses to borrowers’ requests for Loss Mitigation within timelines
that are equivalent to or faster than those provided under HAMP guidelines. Specifically,
CitiMortgage’s policies and procedures provide timelines for the completion of various
milestones in the Loss Mitigation process, including deadlines for file processing,
provision of files to underwriters, and approval by underwriters (if appropriate), in
timeframes that are the same or shorter than those set forth in HAMP guidelines.
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(c)
Establishment of an easily accessible and reliable single point of
contact for each borrower so that the borrower has access to an employee of the
Bank to obtain information throughout the Loss Mitigation, loan modification, and
foreclosure processes.
CitiFinancial will enhance its policies and procedures to identify the Branch Manager of
each CitiFinancial branch as the single point of contact for borrowers whose accounts are
serviced by that branch. The Branch Manager will be the borrowers’ single point of
contact for servicing and information related to Loss Mitigation. Written
communications with borrowers who request Loss Mitigation will contain the name and
contact information of their Branch Manager, along with information for borrowers to
contact other CitiFinancial branch employees in the event the Branch Manager is
unavailable.
As described above, CitiFinancial borrowers are aware that they may contact their local
CitiFinancial branch with questions regarding residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities. Borrowers are familiar with their local branches
because the branches originate the borrowers’ mortgage loans and then provide the
borrowers personalized service. As early as a borrower’s first missed payment, branch
employees will attempt to communicate with the borrower by phone, by mail, or via faceto-face discussions at the branch to explore the reasons for the delinquency and to assess
different Loss Mitigation possibilities. If the borrower wants to explore any Loss
Mitigation opportunities, the Branch Manager will be available to guide the borrower
through the Loss Mitigation process from start to finish. Other CitiFinancial branch
employees may also assist borrowers with the Loss Mitigation process as secondary
points of contact if the Branch Manager is unavailable.
In some cases, CitiFinancial borrowers may be contacted by employees of other Citi
affiliates who engage in collection efforts on behalf of CitiFinancial through automated
calling and co-collection programs. Any borrower who responds to these calls by
expressing interest in loan modification or Loss Mitigation will be referred to his or her
Branch Manager, who will handle any loan modifications or Loss Mitigation as the
borrower’s single point of contact. Such activity may be handled by other CitiFinancial
branch employees during the times the Branch Manager is unavailable.
When CitiFinancial transfers the servicing of a borrower’s loan account to CitiMortgage,
the borrower will receive a new single point of contact within CitiMortgage, provided
that the borrower is eligible for and expresses interest in Loss Mitigation opportunities.
CitiMortgage’s single point of contact system will be staffed by full-time, trained
employees dedicated to assisting borrowers with Loss Mitigation. CitiMortgage will
provide eligible borrowers with their new single point of contact’s direct telephone
number and email address. Within five days of assignment, the single point of contact
will attempt to call the borrower to introduce himself or herself. The borrower may also
log on to a personalized website containing the contact information for his or her single
point of contact. The single point of contact will be responsible for all borrower contact
and will be available to guide the borrower through the Loss Mitigation process.
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In order to smooth the transition during the transfer of servicing, CitiFinancial will
augment its processes by sending borrowers a letter providing information regarding the
reason for the account transfer; the toll-free number of CitiMortgage Default Servicing;
and the availability of Loss Mitigation opportunities with CitiMortgage. Per existing
policy, CitiFinancial requires branch employees to provide any borrower who contacts a
branch after servicing is transferred to CitiMortgage with the toll-free number for
CitiMortgage Default Servicing. CitiFinancial will augment its policies and procedures
to require that, when a borrower calls a CitiFinancial branch after the servicing of the
account has been transferred to CitiMortgage, the CitiFinancial branch employee will
contact CitiMortgage with the borrower on the line to transfer the call to CitiMortgage
Default Servicing. Should borrowers call CitiMortgage Default Servicing and express
interest in Loss Mitigation opportunities, CitiMortgage will be able to provide the
borrower with a new single point of contact as described above.
CitiFinancial will implement quality control testing to ensure that branch employees
appropriately notify borrowers that servicing of their account has been transferred to
CitiMortgage and provide borrowers the correct contact information for CitiMortgage
Default Servicing. This testing will be added to the existing self-assessment and review
programs. The results of these tests are tracked by the Compliance Department. In
addition, the Branch Audit team will also add to its existing branch audits a review of
whether branch employees appropriately notify borrowers that servicing of their account
has been transferred to CitiMortgage and provide borrowers the correct contact
information for CitiMortgage Default Servicing. The Branch Audit team establishes and
tracks corrective action plans and presents reports on branch compliance to senior
management, including field management, and CitiFinancial’s Chief Compliance Officer
and General Counsel.
(d)
A requirement that written communications with the borrower
identify such single point of contact along with one or more direct means of
communication with the contact.
As described above, in the event that a borrower reaches out to his or her local branch to
request Loss Mitigation, CitiFinancial will designate the Branch Manager of each
CitiFinancial branch as the single point of contact for borrowers whose accounts are
serviced by that branch and who request Loss Mitigation. CitiFinancial will augment its
policies and procedure to require Branch Managers to send any borrower who requests
Loss Mitigation a letter within 48 hours of the request explaining the required
documentation and notifying the borrower of the deadline for submitting required
documentation. This letter, and all subsequent communications with the borrower
regarding the borrower’s Loss Mitigation request, will contain the name and contact
information of the borrower’s Branch Manager, along with information for the borrower
to contact other CitiFinancial branch employees in the event the Branch Manager is
unavailable.
In order to further encourage borrowers to contact their local branch regarding Loss
Mitigation opportunities, CitiFinancial will augment its HUD Homeownership
Counseling Letter to include additional language explaining to borrowers that Loss
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Mitigation options are available to avoid potential foreclosure. CitiFinancial’s policies
currently require sending delinquent borrowers the HUD Homeownership Counseling
Letter at 40 days delinquency. This letter will contain contact information for the
borrower’s local branch office. CitiFinancial tests a sampling of delinquent loan account
files to ensure that the HUD Homeownership Counseling letter is generated and sent to
borrowers in a timely manner.
In order to smooth the transition when the servicing of a loan account is transferred to
CitiMortgage, CitiFinancial employees will inform the borrower in writing that his or her
file has been referred to CitiMortgage and provide the borrower with a toll-free number
for CitiMortgage Default Servicing, which the borrower may contact regarding Loss
Mitigation opportunities and to receive a new single point of contact at CitiMortgage as
outlined above.
(e)
Measures to ensure that the single point of contact has access to
current information and personnel (in-house or third-party) sufficient to timely,
accurately, and adequately inform the borrower of the current status of the Loss
Mitigation, loan modification, and foreclosure activities.
The
system allows CitiFinancial branch employees immediate access to account
information and systemic servicing notes on the status of collections; background on any
repayment difficulties; and a summary of attempted and successful collection contacts
with the borrower.
If a borrower seeking information regarding Loss Mitigation cannot reach his or her
Branch Manager, other branch employees, even if not personally acquainted with the
borrower, can gather quickly any information necessary to respond to the borrower’s
inquiry on any account-related topic, including Loss Mitigation, by reviewing the
system and consulting with other branch employees. In the event that a
borrower contacts CitiFinancial’s Customer Account, Research, and Escalation
(“Customer CARE”) Unit with questions regarding Loss Mitigation options, Customer
CARE has access to the borrower’s information through the
system.
In the event that servicing of a borrower’s account is transferred to CitiMortgage, the
borrower’s single point of contact at CitiMortgage will have access to the history of Loss
Mitigation efforts undertaken by CitiFinancial with respect to the borrower.
CitiMortgage uses the
software system to collect information contained in the
system so that it is readily available to Loss Mitigation and foreclosure staff.
CitiFinancial does not employ entities outside Citigroup to contact borrowers regarding
Loss Mitigation, loan modification, or foreclosure activities.
(f)
Measures to ensure that staff are trained specifically in handling
mortgage delinquencies, Loss Mitigation, and loan modifications.
CitiFinancial’s policies and procedures require branch employees who assist borrowers
with Loss Mitigation opportunities to be licensed under the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (“S.A.F.E. Act”), as well as any
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CONFIDENTIAL
necessary state laws. The S.A.F.E. Act requires employees to complete 20 hours of prelicensure training covering federal mortgage-related laws and regulations related to,
among other things, mortgage origination, ethics, consumer protection, fair lending,
disclosures, and non-traditional mortgage products. Employees must also complete
background checks and pass examinations covering pertinent federal mortgage-related
laws and regulations. Once licensed, the S.A.F.E. Act requires 8 hours of continuing
education per year. State licensing and examination requirements differ, and
CitiFinancial’s training programs are adapted for each state. CitiFinancial employees are
aware of these requirements, and employees who do not have these licenses are trained to
refer any questions about Loss Mitigation and loan modification to licensed employees.
The CitiFinancial Legal Department tracks employees’ compliance with the S.A.F.E.
Act’s licensing and continuing education requirements, as well as state licensing and
continuing education requirements.
CitiFinancial requires its employees to complete courses on Basic Branch Skills and
Collections, which introduce new employees to basic branch functions, such as making
collection calls, appropriately referring customer inquiries to employees licensed under
the S.A.F.E. Act, and maintaining files. CitiFinancial also has a number of training
programs designed to assist employees in handling mortgage delinquencies, Loss
Mitigation, and loan modifications. Currently, these programs are offered on an elective
basis. Over 97% of CitiFinancial employees have taken one or more courses on these
subjects. In order to ensure that these programs are implemented fully, CitiFinancial will
reclassify training programs regarding mortgage delinquencies, Loss Mitigation, and loan
modification from “suggested” to “required” and include them with the training all
employees are required to complete within the first six months of employment.
CitiFinancial training programs teach employees that early detection of customer issues is
critical to enable the best usage of Loss Mitigation or loan modification tools.
CitiFinancial employees are trained to work with customers on a number of default
curing tools, including balance refinancing, deferment, and adjustment of terms.
Employees are trained to determine the severity and possible duration of the issues
preventing a borrower from keeping his or her account current, and offer appropriate
solutions based on the borrower’s situation.
CitiFinancial also requires its employees to complete an annual Compliance Refresher
course, which provides training to employees regarding changes to CitiFinancial’s
Compliance policies and procedures. The Compliance Refresher course requires
employees to complete a competency test to demonstrate their understanding of the
training. In addition, CitiFinancial immediately notifies branch employees of changes to
CitiFinancial’s Compliance policies or other legal requirements that are relevant to the
branch employees as they become effective.
CitiFinancial will ensure that employees complete all required CitiFinancial training
programs through the internal
(“
which tracks each
employee’s progress in completing required courses. Training completion is one of the
key performance factors considered when evaluating an employee for promotion. An
employee must be in compliance with published Career Track Training Standards in
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order to be eligible for promotion. Furthermore, where an employee has not completed
required training within the specified time-frame,
generates an exception report
identifying the employee. The report is escalated to branch and regional management. If
an employee misses a training due to illness or a leave of absence, the training start date
is adjusted so that the employee has 6 months of active employment to complete the
training. For annual required training, employees are required to complete missed
sessions immediately upon return. If any employee fails to complete required training
within the deadline, the employee will be subject to disciplinary action, up to and
including termination.
Accounts that are transferred to CitiMortgage are also handled by staff trained in
handling Loss Mitigation and loan modification issues. CitiMortgage has a
comprehensive curriculum for new hires and specific courses for current staff who are
reassigned to Loss Mitigation operations from other departments. Training courses
include knowledge- and skills-based assessments to determine job readiness. These
readiness assessments cover numerous subjects, ranging from Special Situations and
Cure Options to System Interaction and Call Flow. CitiMortgage monitors training
systems as part of its quality assessment process.
(g)
Procedures and controls to ensure that a final decision regarding a
borrower’s loan modification request (whether on a trial or permanent basis) is
made and communicated to the borrower in writing, including the reason(s) why the
borrower did not qualify for the trial or permanent modification (including the net
present value calculations utilized by the Bank, if applicable) by the single point of
contact within a reasonable period of time before any foreclosure sale occurs.
As described above, CitiFinancial branch employees communicate Loss Mitigation
approvals to borrowers orally within 48 hours of CitiFinancial’s decision. CitiFinancial
will augment its policies and procedures to require formally that Branch Managers
communicate all final Loss Mitigation decisions to borrowers orally within 10 days of
such decision.
CitiFinancial’s policies and procedures require branch employees to send borrowers who
are denied first mortgage modifications a written notice of adverse action within 48 hours
of the decision. CitiFinancial will improve these policies and procedures to require
Branch Managers to send borrowers who are denied second mortgage modifications a
written notice of adverse action within 48 hours of the decision. CitiFinancial’s adverse
action letters contain a description of why the loan modification was not granted, and
they list the branch office’s phone number and address in case the borrower wishes to
follow up with questions regarding the reasons the loan modification was denied.
CitiFinancial will augment its adverse action letters to include the name and contact
information of the borrower’s Branch Manager, along with information to contact other
branch employees if the Branch Manager is unavailable.
Once the servicing of an account is transferred, the borrower’s single point of contact at
CitiMortgage will be responsible for communicating with the borrower regarding Loss
Mitigation requests. CitiMortgage will require the borrower’s single point of contact to
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communicate orally any final decisions regarding Loss Mitigation requests within two
business days of the decision. CitiMortgage’s current policies and procedures require
that a letter informing all borrowers of any approval or adverse action be sent within ten
business days of that decision, and those policies will remain in effect.
Borrowers’ accounts are not referred to foreclosure counsel to initiate foreclosure
proceedings until after servicing of the accounts is transferred to CitiMortgage. As a
result of state foreclosure timelines, along with administrative processing times from
CitiFinancial’s denial of Loss Mitigation to CitiMortgage’s initiation of foreclosure
proceedings through foreclosure counsel, there will be a reasonable period of time
between any CitiFinancial denial of Loss Mitigation and foreclosure sale.
CitiFinancial will implement quality control testing to ensure that Branch Managers
appropriately send borrowers adverse action letters containing reasons for the denial of
the borrower’s loan modification request. This testing will be added to the existing selfassessment and review programs. The results of these tests are tracked by the
Compliance Department. In addition, the Branch Audit team will also add to its existing
branch audits a review of whether Branch Managers appropriately send borrowers
adverse action letters containing reasons for denial. The Branch Audit team will establish
and track any necessary corrective action plans and present reports on branch compliance
to senior management, including field management, and CitiFinancial’s Chief
Compliance Officer and General Counsel.
(h)
Procedures and controls to ensure that when the borrower’s loan has
been approved for modification on a trial or permanent basis that: (i) no foreclosure
or further legal action predicate to foreclosure occurs, unless the borrower is
deemed in default on the terms of the trial or permanent modification; and (ii) the
single point of contact remains available to the borrower and continues to be
referenced on all written communications with the borrower.
As described above, if CitiFinancial is able to reach a successful Loss Mitigation solution
with a borrower before the servicing of an account is transferred to CitiMortgage, the
transfer process immediately halts. The account remains with the CitiFinancial branch,
and the Branch Manager continues to be the single point of contact in communications
with the borrower, with other branch employees serving as secondary points of contact if
the Branch Manager is unavailable.
CitiFinancial will enhance its policies and procedures to specifically direct Branch
Managers to place a hold on any account where the borrower is actively pursuing Loss
Mitigation with CitiFinancial. To ensure that Branch Managers appropriately place these
holds, CitiFinancial District Managers will be required to review accounts set to be
transferred to CitiMortgage for servicing and submit their approval prior to the transfer.
As a result of the hold, the servicing of the account will not be transferred to
CitiMortgage unless and until (1) CitiFinancial has made a determination that the
borrower is not eligible for the borrower’s requested Loss Mitigation opportunity; or (2)
the borrower confirms in writing that he or she is no longer interested in pursuing Loss
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CONFIDENTIAL
Mitigation; or (3) the borrower has ceased pursuing Loss Mitigation.7 Furthermore,
CitiFinancial will augment its policies and procedures to direct Branch Managers to place
a hold on a borrower’s account until any complaint concerning denial of a Loss
Mitigation request is addressed.
Once the servicing of a borrower’s account is transferred to CitiMortgage, eligible
borrowers will receive a new single point of contact at CitiMortgage as outlined above,
and CitiMortgage’s procedures for halting foreclosure will apply, should a borrower enter
the Loss Mitigation process. These procedures include an enhanced centralized system
for appropriately postponing foreclosure activity when a borrower engages in, or
demonstrates a willingness to engage in, Loss Mitigation or loan modification activity.
CitiMortgage is developing a matrix outlining the process for determining when
postponement of a foreclosure is appropriate that accounts for factors such as account
status, loan type, and state-by-state differences in foreclosure processes. CitiMortgage
staff will be trained to use the matrix properly to ensure that postponements occur in a
timely and accurate manner.
(i)
Policies and procedures to enable borrowers to make complaints
regarding the Loss Mitigation or modification process, denial of modification
requests, the foreclosure process, or foreclosure activities which prevent a borrower
from pursuing Loss Mitigation or modification options, and a process for making
borrowers aware of the complaint procedures.
On every billing statement, CitiFinancial provides customers with the toll-free number
for CitiFinancial’s Customer Complaint Hotline, which borrowers are informed they may
call if they feel they have been treated unfairly in any way. In the event that a borrower
calls the toll-free number with a complaint, the complaint is handled by the Customer
CARE Unit, which is a centralized department based in Dallas, Texas. The Customer
CARE Unit will attempt to resolve the complaint to the borrower’s satisfaction, and, if
the complaint cannot be addressed or is sufficiently serious in nature, the Customer
CARE Unit will escalate the complaint to CitiFinancial’s Compliance or Legal
Departments.
In addition, all billing statements and deficiency letters sent to borrowers list the contact
information for the borrowers’ local branch offices, which borrowers may contact with
complaints or inquiries. If branch employees cannot resolve a borrower’s complaint, or
the complaint is sufficiently serious in nature, branch employees have specific
instructions to escalate the borrower’s complaint to the Compliance or Legal
Departments.
In order to enhance its processes for handling borrower complaints, including complaints
regarding Loss Mitigation or loan modification processes, CitiFinancial will augment the
CitiFinancial customer self-service website with the toll-free number for CitiFinancial’s
7
CitiFinancial will consider a borrower to have ceased pursuing Loss Mitigation when the borrower fails to
respond to CitiFinancial’s request for borrowers to provide or execute necessary documents within 30 days
of when the borrower initiated the Loss Mitigation request.
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Customer Complaint Hotline, which borrowers may call to file or escalate complaints
regarding Loss Mitigation, loan modification, or foreclosure activities. In addition, all
adverse action letters sent to borrowers who are denied loan modifications will contain
contact information for the borrowers’ Branch Manager, whom borrowers may contact to
dispute CitiFinancial’s loan modification decisions. As described above, CitiFinancial
will direct Branch Managers to place a hold on a borrower’s account until any complaint
concerning denial of a Loss Mitigation request is addressed.
After servicing of an account is transferred, customer complaints will be handled by
CitiMortgage in accordance with its enhanced policies and procedures. Under
CitiMortgage’s enhanced policies and procedures, CitiMortgage will provide borrowers
with information regarding how to file or escalate complaints (i) on CitiMortgage’s
website at cmi.com; (ii) in all adverse action letters sent to borrowers; and (iii) in notices
of referral to foreclosure. Each includes the toll-free telephone number for borrower
escalation assistance, the hours of availability for the toll-free telephone number, and an
email address and mailing address where borrowers can send written complaints or
disputes.
(j)
Procedures for the prompt review, escalation, and resolution of
borrower complaints, including a process to communicate the results of the review
to the borrower on a timely basis.
Borrowers may contact either their CitiFinancial branch or CitiFinancial’s Customer
CARE Unit to file or escalate complaints. If the CitiFinancial branch or the Customer
CARE Unit cannot quickly address the complaint, or the complaint is sufficiently serious
in nature, the complaint will be escalated to the Compliance or Legal Departments. The
Compliance or Legal Department will begin investigating the complaint within two to
three business days of receipt. CitiFinancial’s policies and procedures require a response
to escalated complaints within 30 days of escalation. Any complaint that is received in
writing receives a written response.
Complaints that are not addressed within 30 days are discussed in a weekly escalation
meeting with the Legal and Compliance Departments. The Legal and Compliance
Departments follow up to ensure that an escalated complaint is then addressed in a timely
fashion.
CitiFinancial’s Customer CARE Unit uses a centralized system to track complaints from
escalation to disposition, and CitiFinancial’s Compliance Department compiles a
quarterly analysis of customer complaints by complaint category and by state. This
system tracks the initiation and disposition dates for customer complaints. It also tracks
complaints that are aged over 30 days. The analysis of the complaints is compiled and
submitted to senior management for review. CitiFinancial will monitor customer
complaints concerning Loss Mitigation and establish key risk indicators that will trigger
targeted reviews of branches.
After servicing of an account is transferred, CitiMortgage’s enhanced policies and
procedures will apply to the review, escalation, and resolution of borrower complaints.
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CitiMortgage will provide borrowers with two initial avenues available to raise a
complaint. Borrowers may either ask to speak to their single point of contact’s manager
or call CitiMortgage’s toll toll-free escalation hotline. If a borrower calls the toll-free
escalation hotline and is unable to resolve his or her complaint with a Loss Mitigation
agent, the borrower will be directed to the manager of the Loss Mitigation agent. If, after
speaking to a manager, a borrower is unable to resolve his or her dispute and/or
complaint, the borrower will be directed to the CitiMortgage Executive Response Unit
(“ERU”). If necessary to provide sufficient relief through the dispute and/or complaint
resolution process, an ERU specialist can postpone foreclosure processes until the dispute
and/or complaint is resolved.
(k)
Policies and procedures to ensure that payments are credited in a
prompt and timely manner; that payments, including partial payments to the extent
permissible under the terms of applicable legal instruments, are applied to
scheduled principal, interest, and/or escrow before fees, and that any misapplication
of borrower funds is corrected in a prompt and timely manner.
CitiFinancial is able to accept payments on borrower accounts from a variety of payment
sources and options, and CitiFinancial policy provides for posting of all payments within
one business day of receipt. Borrowers are always free to come into the branch and pay
by cash or check. Alternatively, monthly statements also provide the address for a
payment lockbox where borrowers may mail their monthly payment. CitiFinancial also
accepts phone payments, Western Union payments, auto-debit payments, and electronic
payments. In addition to full monthly payments, CitiFinancial branches will also accept
partial payments from borrowers in situations where it is not possible for the borrower to
remit the full amount due. Payments are applied to scheduled principal, interest, fees
and/or escrow in compliance with the provisions of the promissory note and applicable
state laws.
CitiFinancial’s policies and procedures for payments are set forth in CitiFinancial’s
Online Manual (“OLM”). The OLM provides that the effective date of a mailed payment
is the date of receipt regardless of the day the payment is posted. In instances where a
customer has mailed a payment that was not then posted, CitiFinancial employees are
required to contact the customer, obtain a copy of the customer’s cashed check, and
investigate further with the
Support Department to ensure that the payment is
processed correctly.
The OLM also gives guidance on how to handle misapplied payments or payments that
are not readily identifiable as belonging to a particular account. CitiFinancial employees
are required to obtain a cancelled check or receipt, examine the date on documentation,
review the branch accounts for the amount of the payment, and review the daily cash
summary report for any overages around the time of the payment to determine how the
payment was applied. A misapplied payment is then corrected and credited as
appropriate.
CitiFinancial has quality control testing to ensure that payments made to branches are
appropriately posted and any misapplication of funds is corrected in a timely manner.
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CONFIDENTIAL
The results of these tests are tracked by the Compliance Department. In addition, the
Branch Audit team determines whether payments are appropriately posted and any
misapplication of funds is corrected in a timely manner. The Branch Audit team
establishes and tracks any necessary corrective action plan and presents reports on branch
compliance to senior management, including field management, and CitiFinancial’s
Chief Compliance Officer and General Counsel.
Payments made to lockboxes are reviewed by CBNA’s North American Operations &
Technology group, which creates daily and monthly scorecards measuring volume and
cycle-time performance and tests monthly payment samples. The same process applies
for payments made to CitiMortgage after the servicing of a loan is transferred to
CitiMortgage.
(l)
Policies and procedures to ensure that timely information about Loss
Mitigation options is sent to the borrower in the event of a delinquency or default,
including plain language notices about loan modification and the pendency of
foreclosure proceedings.
As part of its Collection Follow Up policy, in the event of delinquency, CitiFinancial
branches send borrowers letters in plain language detailing payment options and other
Loss Mitigation tools that may be available, as well as contact information for
CitiFinancial branch employees who may further assist borrowers with Loss Mitigation
opportunities.
CitiFinancial’s processes gives branches the flexibility to send letters at various stages of
delinquency based upon their knowledge of borrowers’ particular situations. The
discretion afforded to branches is guided by data analysis and supervision by
management. The
system contains a collection worklist, which lists delinquent
customers. Because individual branches have a relatively small number of employees
and interact with customers often, Branch Managers are involved with collections and
Loss Mitigation efforts and require employees to contact customers proactively.
As described above, CitiFinancial will enhance its existing procedures by updating the
HUD Homeownership Counseling letter, which is sent to all borrowers when they are 40
days delinquent, to include additional language explaining to borrowers that loan
modification options are available to help them avoid potential foreclosure. This letter
will contain contact information for borrowers’ local branch offices. CitiFinancial tests a
sampling of delinquent loan account files to ensure that the HUD Homeownership
Counseling letter is generated and sent to borrowers in a timely manner. The results of
these tests are tracked by the Compliance Department.
For borrowers whose accounts have been transferred to CitiMortgage for servicing,
CitiMortgage is developing new procedures for providing notification to all borrowers of
the full range of potentially available Loss Mitigation and loan modification treatments.
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CONFIDENTIAL
(m)
Policies and procedures to ensure that foreclosure, Loss Mitigation,
and loan modification documents provided to borrowers and third parties are
appropriately maintained and tracked, and that borrowers generally will not be
required to resubmit the same documented information that has already been
provided, and that borrowers are notified promptly of the need for additional
information.
CitiFinancial branch offices maintain physical files for borrowers that branch employees
update from origination to payout. CitiFinancial branches do not image borrower
documents or store loan documentation electronically. The physical files include all loan
documentation, including correspondence, modification paperwork, and any other
relevant document detailing account activity throughout the course of the loan’s lifecycle.
With regard specifically to loan modification documentation, CitiFinancial branch
employees update worksheets as documents are requested by the branch and received
from the borrower. Information on all pending requests for loan modification documents
is available in the
system so that any branch or other CitiFinancial employee can
view the status of the borrower’s loan modification.
In the event the servicing of an account is transferred to CitiMortgage, CitiFinancial will
deliver to CitiMortgage the complete original physical file for each account and maintain
a copy of the file for its records. Once the file is delivered to CitiMortgage, CitiMortgage
images and categorizes all documents, and places them in CitiMortgage’s imaging
repository,
from which CitiMortgage staff can access the documents.
Documents are stored in
until at least seven years after a loan is liquidated.
When documents are sent to foreclosure counsel, they are indexed in CitiMortgage’s
system, which is linked to
CitiFinancial will implement quality control testing to ensure that branch employees
appropriately track and maintain borrower loan files, and that branch employees timely
notify borrowers of missing documents. This testing will be added to the existing selfassessment and review programs. The results of these tests are tracked by the
Compliance Department. In addition, the Branch Audit team will also add to its existing
branch audits a review of whether branch employees appropriately track and maintain
borrower loan files, and that branch employees timely notify borrowers of missing
documents. The Branch Audit team will establish and track any required corrective
action plans and present reports on branch compliance to senior management, including
field management, and CitiFinancial’s Chief Compliance Officer and General Counsel.
(n)
Policies and procedures to consider loan modifications or other Loss
Mitigation Activities with respect to junior lien loans owned by the Bank, and to
factor the risks associated with such junior lien loans into loan loss reserving
practices, where the Bank services the associated first lien mortgage and becomes
aware that such first lien mortgage is delinquent or has been modified. Such policies
and procedures shall require the ongoing maintenance of appropriate loss reserves
for junior lien mortgages owned by the Bank and the charge-off of such junior lien
loans in accordance with FFIEC retail credit classification guidelines.
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CONFIDENTIAL
CitiFinancial’s policies and procedures regarding reserves and charge-offs are in
compliance with the substance of this provision of the OCC Order. Pursuant to
CitiFinancial’s policies and procedures, borrowers requesting a modification of a junior
lien loan owned by CitiFinancial are considered for CitiFinancial’s proprietary
modifications. CitiFinancial will draft and implement policy to ensure that all
CitiFinancial junior liens are taken into consideration when an analysis of a loan
modification request begins on the CitiFinancial first mortgage.
CitiFinancial applies appropriate charge-off guidelines for all owned mortgages,
including second-lien loans, consistent with its reserving and charge-off policies and
procedures, as follows:
x
Reserves have been created for all second-lien loans based upon the CitiFinancial
SR-0 model.
x
The SR-0 framework applies different reserve ratios to each delinquency bucket.
x
CitiFinancial applies an additional reserve to the level recommended by the SR-0
model (for current bucket) based on its Emergent Loss Period (“ELP”) analysis.
This reserve is designed for current accounts, which may become impaired by a
drop in the borrower’s FICO score, and addresses accounts that are impaired if the
first-lien loan is delinquent or modified. SR-0 assumes that impaired loans in the
current bucket will roll to loss within the write-off period plus one month. The
ELP factor addresses the additional risk of increased losses associated with
impaired loans that are in the current bucket (i.e., an incurred loss event such as
loss of a job may have occurred but is not yet visible) and is based on actual
observed losses.
x
Additional reserves are also applied for loans involved in Loss Mitigation
activities. This includes the calculation of TDR reserves and, as necessary, the
application of additional reserves for short-term loan modifications over and
above the SR-0 model.
Finally, management assesses the need for additional Management Adjustment reserves,
over and above what the SR-0 and ELP models require, to address additional headwinds.
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Appendix 2 –
CitiFinancial Consent Order Action Plan
Federal Reserve Board CitiFinancial Consent Order Action Plan
Federal Reserve Board
CitiFinancial Consent Order Action Plan
Pursuant to Paragraphs 6 through 9
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. § 261.14(a)(4), 261.14(a)(8)
SUBMITTED SUBJECT TO 12 U S.C. § 1828(X)
Tuesday, July 12, 2011
CONFIDENTIAL - NOT FOR DISTRIBUTION
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 1
As of 7/12/2011
Federal Reserve Board CitiFinancial Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due
Paragraph 6 - CitiFinancial Activities
Plan for
Strengthening
Coordination of
Loss Mitigation
Communication
with Borrowers
Review for
Impediments to
Loss Mitigation
Process
Paragraph 6 - Within 60 days of this Order, CitiFinancial
shall submit to the Reserve Bank an acceptable written
plan for strengthening coordination of communications
CFNA Employee
with borrowers, both oral and written, related to Loss
Incentives Review
Mitigation and foreclosure activities to ensure that
communications are timely and effective, are designed to
avoid confusion to borrowers, to ensure continuity in the
handling of borrowers' loan files during the Loss
Mitigation and foreclosure processes by personnel
knowledgeable about the borrower's situation, and to
ensure that decisions concerning Loss Mitigation options
or programs continue to be made and communicated in a
timely fashion. Prior to submitting the plan, CitiFinancial
shall conduct a review to determine (i) whether processes
OCC IX a
involving past due mortgage loans or foreclosures
OCC IX h
overlap in such a way that they may impair or impede a
borrower's efforts to effectively pursue a Loss Mitigation
option or program, and (ii) whether employee incentive
compensation practices discourage Loss Mitigation. The
plan shall provide for at least the same level of
coordination of communications with borrowers as the
level that the Bank and CitiMortgage are required to
maintain in their Consent Order with the OCC.
6.1
Develop a plan for strengthening coordination of Loss Mitigation communication with borrowers, as required
CFNA
Completed
5/10/2011
6.2
Submit plan for approval under Deliverable Submission Review Process
CFNA
Completed
6/6/2011
6.3
Submit plan to the FRB
Legal
Completed
6/13/2011
6.4
Implement plan for strengthening coordination of Loss Mitigation communication with borrowers
CFNA
In Progress
8/11/2011
6.5
Review CitiFinancial's relevant policy and procedures, branch training materials, standard customer letters and billing
statements, as well as interviews with key business managers for impediments to Loss Mitigation process
CFNA
Completed
5/5/2011
6.6
Review current incentive compensation practices to determine if they in any way discourage loss mitigation
CFNA
Completed
5/5/2011
6.7
Report results of the review to senior managers and obtain their concurrence on current compensation practices
CFNA
Completed
5/5/2011
6.8
Assess and review current policies and procedures as they relate to OCC IX
CFNA
Completed
5/5/2011
6.9
Augment policies and procedures to direct branch managers to place a hold on any account where a borrower is actively
pursuing loss mitigation with CitiFinancial
CFNA
Completed
7/25/2011
6.10
Augment policies and procedures to direct branch managers to place a hold on a borrowers account until any complaint
covering denial of a loss mitigation request is addressed
CFNA
Completed
7/25/2011
6.11
Implement quality control testing to ensure that branch managers appropriately place holds on accounts to prevent them from
transferring to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.12
Implement for existing branch audits, a review of whether branch managers appropriately place holds on accounts to prevent
servicing transfer to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.13
Develop a plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
7/15/2011
6.14
Implement the plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
8/1/2011
6.15
CitiFinancial will augment its policies and procedures to require formally that Branch Managers communicate all final Loss
Mitigation decisions to borrowers orally within 10 days of such decision.
CFNA
Completed
7/25/2011
6.16
Augment policy and procedures requiring branch managers to send any borrower who requests loss mitigation, a letter within
48 hours explaining required documentation and notifying borrower of the 30 day deadline for submitting required
documentation
CFNA
Completed
7/25/2011
6.17
CitiFinancial will improve these policies and procedures to require Branch Managers to send borrowers who are denied
second mortgage modifications a written notice of adverse action within 48 hours of the decision.
CFNA
Completed
8/1/2011
6.18
CitiFinancial will implement quality control testing to ensure that Branch Managers send borrowers timely letters explaining
Loss Mitigation documentation requirements, timelines, and decisions.
CFNA
In Progress
8/1/2011
6.19
Implement additional branch audit processes to determine if branches send borrowers timely letters explaining loss mitigation
documentation requirements, timelines and decisions
CFNA
In Progress
8/1/2011
Submission Ref
Task
Functional Lead
Status
Due
OCC IX b
The Order
Workplan
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 2
Federal Reserve Board CitiFinancial Consent Order Action Plan
The Order
Paragraph 6 (Continued) - Within 60 days of this Order,
CitiFinancial shall submit to the Reserve Bank an
acceptable written plan for strengthening coordination of
communications with borrowers, both oral and written,
related to Loss Mitigation and foreclosure activities to
ensure that communications are timely and effective, are
designed to avoid confusion to borrowers, to ensure
continuity in the handling of borrowers' loan files during
the Loss Mitigation and foreclosure processes by
personnel knowledgeable about the borrower's situation,
and to ensure that decisions concerning Loss Mitigation
options or programs continue to be made and
communicated in a timely fashion. Prior to submitting the
plan, CitiFinancial shall conduct a review to determine (i)
whether processes involving past due mortgage loans or
foreclosures overlap in such a way that they may impair
or impede a borrower's efforts to effectively pursue a
Loss Mitigation option or program, and (ii) whether
employee incentive compensation practices discourage
Loss Mitigation. The plan shall provide for at least the
same level of coordination of communications with
borrowers as the level that the Bank and CitiMortgage are
required to maintain in their Consent Order with the OCC.
Workplan
Functional Lead
Status
Due
6.20
Implement additional branch audit processes to determine if branches appropriately direct borrowers whose servicing was
transferred to CitiMortgage Default Servicing
CFNA
In Progress
8/1/2011
6.21
Develop customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
7/25/2011
6.22
CitiFinancial will augment its policies and procedures to require that, when a borrower calls a CitiFinancial branch after the
servicing of the account has been transferred to CitiMortgage, the CitiFinancial branch manager will contact CitiMortgage with
the borrower on the line, subject to the borrower's permission, to transfer the call to CitiMortgage Default Servicing.
CFNA
Completed
8/1/2011
6.23
Implement customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
8/1/2011
6.24
Enhance policies and procedures to identify the Branch Manager of each CitiFinancial branch as the single point of contact
for borrowers whose accounts are serviced by that branch and who request loss mitigation.
CFNA
Completed
8/1/2011
6.25
Written communications with borrowers who request Loss Mitigation will contain the name and contact information of their
Branch Manager, along with information for borrowers to contact other CitiFinancial branch employees in the event the Branch
Manager is unavailable.
CFNA
Completed
8/1/2011
6.26
Update systematic HUD homeownership counseling letter sent to borrowers at 40 days delinquent to include loss mitigation
options which explains to customers that modification options are available to borrowers
CFNA
Completed
7/30/2011
6.27
Reclassify training programs regarding mortgage delinquencies, loss mitigation, and loan modification from "suggested' to
"required" for all employees
CFNA
Completed
7/1/2011
6.28
Implement quality control testing to ensure branch managers appropriately send borrowers adverse action letters containing
reasons for the denial of the borrowers loan modification request
CFNA
In Progress
8/1/2011
6.29
Implement additional branch audit processes to determine if branch manager appropriately send borrowers adverse action
letters containing reason for denial
CFNA
In Progress
8/1/2011
6.30
Inclusion of local branch manager contact information on adverse action letters sent to borrowers denied loan modifications
CFNA
Completed
7/25/2011
OCC IX i
6.31
Inclusion of a toll free customer complaint hotline on the CitiFinancial self service website will facilitate borrowers calling to
file or escalate borrower complaints regarding loss mitigation, loan modification or foreclosure activities
CFNA
Completed
8/1/2011
OCC IX j
6.32
Monitor customer complaints concerning loss mitigation and establish a key risk indicator that will trigger targeted reviews to
branches
CFNA
Completed
8/1/2011
OCC IX k
6.33
Ensure CitiFinancial has quality control testing to ensure that payments made to branches are appropriately posted and any
misapplication of funds is corrected in an appropriate and timely manner.
CFNA
Completed
6/30/2011
6.34
Implement quality control testing to ensure that branch managers appropriately track and maintain borrower loan files, and
that branch managers timely notify borrowers of missing documents
CFNA
Completed
8/1/2011
6.35
Implement additional branch audit processes to determine if branch employees appropriately track and maintain borrower
loan files, and that branch employees timely notify borrowers of missing documents
CFNA
In Progress
8/1/2011
OCC IX n
6.36
Augment or draft new policy to ensure that all junior liens owned by CitiFinancial are taken into consideration when analysis of
a loan modification begins on a CitiFinancial first mortgage
CFNA
Completed
8/1/2011
Workplan
Submission Ref
Task
Functional Lead
Status
Due
OCC IX c
OCC IX d
OCC IX e
OCC IX l
OCC IX f
OCC IX g
Submission Ref
Task
As of 7/12/2011
OCC IX m
The Order
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 3
Federal Reserve Board CitiFinancial Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
7.1
Update policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities on behalf of CitiFinancial
7.2
As of 7/12/2011
Functional Lead
Status
Due
Compliance
Completed
5/27/2011
Submit policies and procedures to FRB
CFNA
Completed
5/27/2011
7.3
Draft Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/15/2011
7.4
Execute Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/31/2011
7.5
Establish Oversight Committee
CFNA
Completed
6/30/2011
7.6
Create template for reporting material concerns
CFNA
In Progress
7/31/2011
7.7
Obtain CMI Scorecards (Law Firms and Third Party Vendors)
CFNA
Completed
6/30/2011
7.8
Create job description for Oversight Relationship Manager (RM)
CFNA
Completed
5/27/2011
7.9
Hire RM or designate interim RM
CFNA
Completed
6/9/2011
Paragraph 7 - CitiFinancial Activities
Execute New SLA
Between
CitiFinancial and
CMI
Establish
Paragraph 7 - Within 45 days of this Order, CitiFinancial
Oversight
shall submit to the Reserve Bank acceptable policies and
Committee
procedures for the oversight of foreclosure activities
performed by CitiMortgage on behalf of CitiFinancial. The
policies and procedures shall, at a minimum, provide for
appropriate oversight of CitiMortgage's foreclosure
Develop
activities with respect to residential mortgage loans
Processes for
otherwise serviced by CitiFinancial to ensure that
Remote Reviews
CitiMortgage complies with the Legal Requirements.
of CMI
Hire Oversight
Relationship
Manager
The Order
Schedule
Oversight
Committee
Meetings
7.10
Schedule quarterly internal meetings
CFNA
Completed
6/9/2011
7.11
Schedule quarterly meetings with CMI
CFNA
In Progress
7/31/2011
7.12
Schedule twice-yearly on-site reviews of CMI
CFNA
In Progress
7/31/2011
Workplan
Submission Ref
Task
Functional Lead
Status
Due
Enhanced ERM
Program
8b.1
Adopt and implement the plan approved by the FRB to enhance the enterprise-wide risk management (ERM) program for the
U.S. Residential Mortgage Servicers
In Business Risk
Not Started
Within 10 Days of
FRB Approval
Enhanced ECP
Program
8b.2
Adopt and implement the plan approved by the FRB to enhance the ECP program
Compliance
Not Started
Within 10 Days of
FRB Approval
8b.3
Adopt and implement the plan approved by the FRB to enhance the Internal Audit program
ARR
Not Started
Within 10 Days of
FRB Approval
8b.4
Adopt and implement written plan, approved by the FRB, for strengthening communication with borrowers
CFNA
Not Started
Within 10 Days of
FRB Approval
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
8b.5
Adopt and implement policies and procedures, approved by the FRB, in accordance with the CFNA oversight plan
CFNA
Not Started
Within 10 Days of
FRB Approval
Workplan
Submission Ref
Functional Lead
Status
Due
Paragraph 8 - Approval, Implementation, and
Progress Reports
Enhanced Internal
Paragraph 8b - Within 10 days of approval by the
Audit Program
Reserve Bank, Citigroup and CitiFinancial, as applicable,
shall adopt the approved plans, policies, and procedures.
Upon adoption, Citigroup and CitiFinancial, as applicable,
Enhanced
shall implement the approved plans, policies, and
Borrower
procedures, and thereafter fully comply with them.
Communication
Plan
The Order
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 4
Federal Reserve Board CitiFinancial Consent Order Action Plan
The Order
Paragraph 8c - During the term of this Order, the
approved plans, policies, and procedures shall not be
amended or rescinded without the prior written approval
of the Reserve Bank.
The Order
Workplan
Amendment
Requests
Workplan
Paragraph 8d - During the term of this Order, Citigroup
and CitiFinancial, as applicable, shall revise the
approved plans, policies, and procedures as necessary
Revision to the
to incorporate new or changes to the Legal Requirements
Approved Plans,
and supervisory guidance of the Board of Governors. The
Policies, and
revised plans, policies, and procedures shall be
Procedures
submitted to the Reserve Bank for approval at the same
time as the progress reports described in paragraph 9 of
this Order.
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due
8c.1
Draft proposed changes to approved plans, policies, and procedures, as necessary
Legal
Not Started
Ongoing
8c.2
Submit proposed changes to approved plans, policies, and procedures for approval under the Deliverable Submission Review
Process, as necessary
Legal
Not Started
Ongoing
8c.3
Request written approval for proposed changes to approved plans, policies, and procedures from the FRB, as necessary
Legal
Not Started
Ongoing
Functional Lead
Status
Due
Operations
Not Started
Ongoing
Submission Ref
Task
8d.1
Obtain revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance from
repository, as necessary (Citigroup and CFNA)
8d.2
Submit revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to
Boards, as necessary (Citigroup and CFNA)
Legal
Not Started
Ongoing
8d.3
Attach revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to
progress reports for submission to the FRB, as necessary (Citigroup and CFNA)
Legal
Not Started
With progress
reports
Functional Lead
Status
Due
Submission Ref
Task
Paragraph 9 - Approval, Implementation, and
Progress Reports
Compliance
Paragraph 9 -Within 30 days after the end of each
Committee
calendar quarter following the date of this Order,
Progress Reports
Citigroup's and CitiFinancial's boards of directors, or
authorized committee of the boards of directors, shall
jointly submit to the Reserve Bank written progress
reports detailing the form and manner of all actions taken
to secure compliance with the provisions of this Order
and the results thereof.
Monitoring
Implementation
The Order
Workplan
Independent Risk /
PMO
Completed
6/10/2011
Design template for written Progress Report as per Consent Order requirements
PMO
Completed
6/20/2011
9.1
Evaluate Compliance Committee Progress Report requirements as per the Consent Order
9.2
9.3
Validate Progress Report template with key stakeholders
PMO
Completed
6/25/2011
9.4
Produce Initial Progress Report
PMO
Completed
7/10/2011
9.5
Submit Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
7/15/2011
9.6
Submit Progress Report to Citigroup Board for review and approval
PMO
Not Started
7/20/2011
9.7
Submit first quarterly Progress Report to FRB
Board / Legal / MCC
Not Started
8/1/2011
9.8
Produce second quarterly Progress Report
PMO
Not Started
10/10/2011
9.9
Submit second quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
10/15/2011
9.10
Submit second quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
10/20/2011
9.11
Submit second quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
10/31/2011
9.12
Produce third quarterly Progress Report
PMO
Not Started
1/10/2012
9.13
Submit third quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
1/15/2012
9.14
Submit third quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
1/20/2012
9.15
Submit third quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
1/30/2012
9.16
Produce future Progress Reports for FRB submission quarterly, as required
PMO
Not Started
As Required
As Required
9.17
Submit future quarterly Progress Reports for approval under Deliverable Submission Review Process
PMO
Not Started
9.18
Submit future Progress Reports to Citigroup Board
Board / Legal / MCC
Not Started
As Required
9.19
Submit future Progress Reports to the FRB
Board / Legal / MCC
Not Started
As Required
9.20
Develop status reporting after 60 day submission
PMO
Completed
6/15/2011
9.21
Develop Board status reporting calendar
PMO
Completed
7/1/2011
9.22
Submit Board status report to the MCC for review
PMO
Completed
7/5/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 5
Appendix 2 –
Narratives
Paragraph 2 –
Board Oversight
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Paragraph 2 – Board Oversight1
(2) Within 60 days of this Order, the board of directors of Citigroup shall submit to
the Reserve Bank a written plan to strengthen the board’s oversight of Citigroup’s
enterprise-wide risk management (“ERM”), internal audit, and compliance
programs concerning the residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities conducted through CitiMortgage or CitiFinancial.
The Citigroup Board is submitting the Board Oversight Plan pursuant to Paragraph 2 of
the FRB Order. The Board Oversight Plan has been developed to strengthen the
effectiveness of Board oversight of Citi’s Risk Management & Control Programs for
Mortgage Servicing Activities.
The Board is committed to providing strong and effective oversight of Citi’s Mortgage
Servicing Activities and related Programs on an enterprise-wide basis. In April 2011, the
Board established the MCC with authority “to oversee all actions of management to
secure compliance with the provisions of the [FRB] Order” on behalf of the Board. The
MCC is overseeing Citi management’s implementation and validation of the
Enhancement Plans. In addition, the MCC will provide sustained Board-level oversight
of Citi’s risk management of Mortgage Servicing Activities, with delegated authority to
direct management, as needed, to remedy significant deficiencies identified by Citi’s Risk
Management and Control Programs. A copy of the resolution authorizing the MCC’s
expanded role and responsibilities is attached as Appendix 1. The MCC’s oversight
responsibility is enterprise-wide and supplements existing oversight responsibilities for
Risk Management & Control Programs exercised through the Audit Committee and the
Risk Committee. The MCC meets jointly with the CBNA MCC, at least monthly or
more frequently at its discretion, to receive reporting from senior management. Meeting
minutes will be maintained.
1
This plan is accompanied by a cover letter that provides an overview of Citigroup’s response to the FRB
Order and that includes a glossary of terms and acronyms used but not defined herein.
We respectfully request, pursuant to 5 U.S.C. § 552(b) and 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8), that
confidential treatment be accorded this enclosure, and the confidential and privileged business, commercial,
and financial information it contains, as well as any transcripts, notes, memoranda, or other records created
by, or at the direction of, the Federal Reserve Bank of New York, its officers, or staff that reflect or relate
to this confidential information. We also respectfully request that you promptly inform us of any request
under the Freedom of Information Act seeking access to any of the information enclosed herewith, to
permit us to substantiate the grounds for confidential treatment.
We further note that this enclosure is protected by legal privileges, including but not limited to the
attorney-client and work product privileges. In accordance with 12 U.S.C. § 1828(x), we do not waive, and
expressly preserve, all such privileges and protections.
CONFIDENTIAL
The MCC will report to the full Board at scheduled meetings, or more frequently if
needed, and will confer, as appropriate, with the Audit Committee and the Risk
Committee to permit those standing committees to carry out their statutory, regulatory,
and other responsibilities. Overlapping memberships will facilitate information sharing
among the MCC, Audit Committee, and Risk Committee.
On June 10, 2011, the Board unanimously approved and adopted the Board Oversight
Plan and authorized the submission of the Enhancement Plans to the Reserve Bank.
Key elements of the Board Oversight Plan include:
Oversight Policies and Procedures: The Board, through the Audit Committee, approved
the ORM Framework in March 2011, which is being implemented by each of Citi’s U.S.
Residential Mortgage Servicers. In addition, the Board, or the MCC on behalf of the
Board, plans to approve a Mortgage Servicing Oversight Policy designed to ensure that
Citi’s enterprise-wide risk management program provides effective oversight of
Mortgage Servicing Activities.
Oversight of Third Party Management: The Board, through the MCC, will monitor Citi’s
progress in strengthening risk management policies and procedures around third party
vendors that support Mortgage Servicing Activities.
Oversight of Staffing: The Board, through the MCC, will monitor management’s staffing
assessments and corrective action plans to ensure that Citi has adequate and capable
staffing resources to implement the Enhancement Plans and manage all risks arising from
Mortgage Servicing Activities.
Board Monitoring of MIS: The Board, through the MCC, will review the enhanced risk
metrics and analysis relating to Mortgage Servicing Activities to support Board and
senior management oversight on an enterprise-wide basis.
The plan shall, at a minimum, address, consider, and include:
2(a) Policies to be adopted by the board of directors that are designed to
ensure that the ERM program provides proper risk management oversight with
respect to CitiMortgage’s and CitiFinancial’s residential mortgage loan servicing,
Loss Mitigation, and foreclosure activities, particularly with respect to compliance
with the Legal Requirements, and supervisory standards and guidance of the Board
of Governors as they develop;
The Board, or the MCC on behalf of the Board, plans to approve a U.S. Residential
Mortgage Loan Servicing Risk Management Oversight Policy (“Mortgage Servicing
Oversight Policy”) designed to ensure that Citi’s enterprise-wide risk management
program provides for effective risk management oversight of Citi’s Mortgage Servicing
Activities. The Mortgage Servicing Oversight Policy will apply to all U.S. Residential
Mortgage Servicers, and will direct Citi management to:
-2-
CONFIDENTIAL
x
Establish consistent policies and procedures for identifying, measuring,
managing, and monitoring all risks arising from Mortgage Servicing Activities,
including risks arising from the use of third parties engaged to support those
activities. Such policies and procedures will be consistent with current as well as
prospective Citi policies, including the ORM Policy and Compliance Control
Policy, and will be designed to ensure Citi’s compliance with applicable Legal
Requirements and supervisory standards and guidance of the Board of
Governors.
x
Formalize the Executive Steering Committee, which includes senior leadership
from each of Citi’s U.S. Residential Mortgage Servicers and independent risk
and control functions, to provide cross-business, cross-functional senior
management oversight of Citi’s Mortgage Servicing Activities and to serve as
a forum for the communication, discussion, and coordination of risk
management oversight, including key issues and emerging risks, with respect
to Citi’s Mortgage Servicing Activities on an enterprise-wide basis.
x
Ensure that independent control functions have adequate programs, policies, and
procedures, and have sufficient resources and status within the organization, to
exercise effective risk management oversight of Citi’s Mortgage Servicing
Activities and to require and monitor corrective actions for any identified noncompliance with the FRB Order or Citi policies and procedures relating to
Mortgage Servicing Activities.
x
Establish performance measures and MIS that enable effective oversight of
Mortgage Servicing Activities on an enterprise-wide basis by:
a. the Board or committee(s) thereof;
b. the new Executive Steering Committee referred to above; and
c. Citi’s independent risk and control functions.
The performance measures and MIS will be sufficient to enable Citi personnel to
perform their responsibilities pursuant to the Enhancement Plans, the Mortgage
Servicing Oversight Policy, and other relevant Citi policies and standards.
x
Provide regular reports to the Board or committee(s) thereof regarding Citi’s
Mortgage Servicing Activities, related risk assessments (including compliance
risk assessments), and the status and results of measures taken by management,
or to be taken, to remediate significant control deficiencies with respect to
Mortgage Servicing Activities.
Policy development generally at Citi follows a hierarchy established in the Citi Policy
Governance Directive. As a general matter, the Board approves frameworks, and
management approves policies at the enterprise-wide level. Of particular significance to
Mortgage Servicing Activities, in March 2011, the Audit Committee of the Board
-3-
CONFIDENTIAL
approved Citi’s enterprise-wide ORM Framework, directing Citi senior management to
take “appropriate actions” to apply that framework to all Citi businesses that service U.S.
residential mortgage loans “to prevent the issues from arising again and to root out the
same issues across the Company.” The ORM Framework is intended to ensure the
consistent management across Citi of the operational risks and ongoing exposures in the
development and delivery of products and services to its clients.
Citi-level policies establish core principles and high-level policy statements. Issued by
functional heads, Citi-level policies must be approved by the Citi Policy Committee. The
Citi Policy Committee includes senior representatives from each Citi Business, Region,
and Global Function. Citi-level policies such as the Operational Risk Management
Policy, the Compliance Control Policy, the Supplier Selection and Management Policy,
and the Citi Information Security Standards Policy are relevant to the conduct of
Mortgage Servicing Activities and control of risks arising therefrom. Citi-level policies
are implemented throughout the organization through additional business-level policies,
standards, and procedures.
2(b) policies and procedures to ensure that the ERM program provides
proper risk management of independent contractors, consulting firms, law firms, or
other third parties who are engaged to support residential mortgage loan servicing,
Loss Mitigation, or foreclosure activities or operations, including their compliance
with the Legal Requirements and Citigroup’s internal policies and procedures,
consistent with supervisory guidance of the Board of Governors;
The CSSMP provides the foundation for vendor management throughout the enterprise.
Citi management has recommended that MERS, to which the CSSMP has applied since
January 2011, be designated as a “Most Critical Supplier,” which will subject MERS to
the highest level of third party oversight at Citi.
Also since January 2011, MERS has been subject to Citi’s Third Party Information
Security Assessment program, pursuant to which Citi annually evaluates a third party’s
compliance with standards established under the Citi-level Information Security Policy
and Program approved by the CBNA Board.
Pursuant to the Third Party Management Plan required by Article V of the OCC Order,
Citi management has developed a systematic, risk-based approach to monitoring,
supervising, and overseeing the services provided by third parties, both law firm and nonlaw firm, in support of U.S. Residential Mortgage Servicers that conduct Mortgage
Servicing Activities. This classification system enables CBNA management to apply
enhanced due diligence, internal controls, and governance criteria and processes to thirdparty providers that expose CBNA to risk.
The MCC, through joint meetings and overlapping membership with the CBNA MCC,
will monitor CBNA’s implementation and validation of the Third Party Management
Plan, as well as oversee management’s implementation of policy and procedure
enhancements with respect to third party management at CitiFinancial.
-4-
CONFIDENTIAL
2(c) steps to ensure that Citigroup’s ERM, audit, and compliance
programs have adequate levels and types of officers and staff dedicated to
overseeing CitiMortgage’s and CitiFinancial’s residential mortgage loan servicing,
Loss Mitigation, and foreclosure activities, as applicable, and that these programs
have officers and staff with the requisite qualifications, skills, and ability to comply
with the requirements of this Order;
Citi management is conducting formal assessments of staffing within U.S. Residential
Mortgage Servicers and Risk Management & Control Programs to ensure that human
resources across the organization are adequate and capable of meeting Citi’s
commitments under the Consent Orders.
To provide assurance at the Board level that these staffing assessments are being
conducted in a consistent and comprehensive manner across the enterprise, Citi
Independent Risk and Citi HR have collaborated to develop a Staffing Adequacy
Framework that utilizes a common methodology and reporting template.
The staffing assessments are being undertaken within Citi’s U.S. Residential Mortgage
Servicers and the Risk Management & Control Programs responsible for overseeing
Mortgage Servicing Activities. Each assessment must address the following elements:
1. Organization Structure and Alignment
2. Extent of Managerial Resources and their Qualifications
3. Staffing Levels and Capacity Plans
4. Roles and Responsibilities of Staff
5. Skills & Competencies
6. Training and Development Plans/Tools
7. Talent Management Review (including succession plans for key roles)
8. Performance Management
9. Compensation
10. Process for Monitoring & Management
Independent Risk and HR have prepared written guidance explaining what to consider in
addressing each element and developed an Excel template designed to ensure that
assessment outputs are presented in a consistent and comparable manner. HR is mapping
assessment results against the requirements of the FRB Order and Citi Enhancement
Plans and developing staffing plans in consultation with affected units and other
stakeholders to remedy staffing and competency shortfalls.2
Citi management will report to the MCC and, as appropriate to the MCC’s chartered
oversight responsibilities, to the Audit Committee, the Risk Committee, and the
2
Citi management also is utilizing the Staffing Adequacy Framework to ensure that Citi’s independent
control functions and ARR have the requisite authorities and status to perform the tasks expected of them
under Paragraphs 3, 4, and 5 of the FRB Order.
-5-
CONFIDENTIAL
Personnel and Compensation Committee (the “Compensation Committee”) on the results
of Citi’s staffing assessments and on progress implementing the staffing plans.3 As
appropriate to their respective mandates, these Board-level committees, and the full
Board as appropriate, will authorize the financial and managerial resources required to
support Citi’s implementation of the staffing plans.
2(d) steps to improve the information and reports that will be regularly
reviewed by the board of directors or authorized committee of the board of
directors regarding residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities and operations, including compliance risk assessments and the
status and results of measures taken, or to be taken, to remediate deficiencies in
residential mortgage loan servicing, Loss Mitigation, and foreclosure activities, and
to comply with this Order.
Citi management is taking steps to enhance Board reporting on Mortgage Servicing
Activities, including compliance risk assessments and the status and results of
enhancements made pursuant to the FRB Order. A new Board Mortgage Servicing
Information Package (“Board Mortgage Package”) is being developed to provide the
Board with comprehensive, consolidated risk metrics and analysis of Mortgage Servicing
Activities based on data provided by U.S. Residential Mortgage Servicers, Independent
Risk, Compliance, CER, and ARR.
Specific items to be covered in the Board Mortgage Package include customer service
and problem resolutions, foreclosure documentation and filings, staffing and managerial
resource adequacy, and third-party oversight. The reporting format is expected to include
an executive summary and separate “dashboards” addressing operational risk metrics,
compliance risk issues, ARR results and plans, CER/QA results and plans, borrower
experience, foreclosure metrics, vendor (including law firm) ratings and exposures, Loss
Mitigation metrics, and staffing adequacy metrics in relation to Mortgage Servicing
Activities. Other key performance indicators reported in the Board Mortgage Package
are expected to include Citi’s outstanding residential mortgage portfolio amount and
trends in delinquencies, losses, foreclosures, and loan modifications.
Citi management is in the process of refining the reporting format and metrics, which are
expected to evolve over time as Citi’s techniques and methods improve for assessing and
reporting on the risks of Mortgage Servicing Activities. It is expected that a draft of the
Board Mortgage Package will be presented to the MCC for comment in July 2011, and
the initial reporting format will be finalized in time for the MCC meeting in August 2011.
3
Among other duties, the Audit Committee is responsible for overseeing that ARR is independent and has
adequate resources to fulfill its duties; the Risk Committee is responsible for ensuring that Independent
Risk personnel are qualified and have both the independence and stature to perform assigned duties; and
the Compensation Committee reviews Citi’s management resources, succession planning, and development
activities, as well as the performance of senior management.
-6-
CONFIDENTIAL
Although the new Board Mortgage Package is the primary tool for providing the Board
with an integrated, comprehensive, and enterprise-wide overview of Citi’s Mortgage
Servicing Activities, management has enhanced Board reporting in other respects as well.
In addition to its contribution to the Board Mortgage Package, ARR will report
significant audit issues arising from Citi’s Mortgage Servicing Activities to the Audit
Committee. Key quarterly metrics will include audit results and the status of corrective
action plans for Citi’s U.S. Residential Mortgage Servicers.
Citi management will track the implementation of the Enhancement Plans and report on
progress at each MCC meeting. Senior management and the MCC will report quarterly,
or more frequently as appropriate, to the full Board regarding Citi’s progress in
implementing the Enhancement Plans. The MCC, acting on behalf of the Board, also
will review and submit to the Reserve Bank the written progress reports required under
Paragraph 9 of the FRB Order. Such reports will include a narrative detailing the form
and manner of Citi actions taken to achieve compliance with the provisions of the FRB
Order and the results of those steps.
-7-
Appendix 3 –
FRB Consent Order Action Plan
Federal Reserve Board Consent Order Action Plan
Federal Reserve Board
Consent Order Action Plan
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. § 261.14(a)(4), 261.14(a)(8)
SUBMITTED SUBJECT TO 12 U.S.C. § 1828(X)
Tuesday, July 12, 2011
CONFIDENTIAL - NOT FOR DISTRIBUTION
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 1
As of 7/12/2011
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Legal
Completed
5/27/2011
Independent Risk
Completed
5/28/2011
Legal
Completed
6/6/2011
Independent Risk / Legal
Completed
6/10/2011
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Paragraph 1 - Source of Strength
Paragraph 1 - The board of directors of Citigroup shall
take appropriate steps to fully utilize Citigroup's financial
and managerial resources, pursuant to section 225.4(a)
of Regulation Y of the Board of Governors (12 C.F.R. §
Source of Strength
225.4(a)), to serve as a source of strength to the Bank,
including but not limited to, taking steps to ensure that
the Bank complies with the Consent Order issued by the
OCC regarding the Bank's residential mortgage loan
servicing activities.
The Order
Workplan
1.1
Draft Board Resolution declaring Citigroup's support for Citibank
1.2
Review draft Board Resolution
1.3
Submit to Citigroup Board for approval and adoption
1.4
Obtain Citigroup Board approval of Source of Strength resolution
1.5
Submit resolution of Citigroup Board to the FRB
Submission Ref
Task
Paragraph 2 - Board Oversight
Board Oversight
Plan
Paragraph 2 - Within 60 days of this Order, the board of
directors of Citigroup shall submit to the Reserve Bank a
written plan to strengthen the board's oversight of
Citigroup's enterprise-wide risk management ("ERM"),
internal audit, and compliance programs concerning the
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities conducted through Citi Mortgage or
CitiFinancial. The plan shall, at a minimum, address,
consider, and include: [see paragraph 2, a-d]
The Order
Structure and
Oversight
2.1
Draft Citigroup Board Oversight plan
Independent Risk / Legal
Completed
5/20/2011
2.2
Review Plan and confirm alignment with Consent Order requirements
Independent Risk / Legal
Completed
5/27/2011
2.3
Submit for approval under Deliverable Submission Review Process
Independent Risk / Legal
Completed
6/1/2011
2.4
Submit to Citigroup Board for approval
Legal
Completed
6/6/2011
2.5
Submit Citigroup Board Oversight Plan to the FRB
Legal
Completed
6/13/2011
2.6
Amend charter for Executive Steering Committee
Independent Risk / Legal
Completed
6/30/2011
2.7
Develop framework to assess Citigroup Board committee charters and resolutions against FRB Consent Order requirements
Independent Risk
Completed
5/3/2011
2.8
Identify and inventory existing Citigroup Board committee charters and resolutions with responsibility for risk & governance
functions
Independent Risk
Completed
5/6/2011
2.9
Assess Citigroup Board committee charters and resolutions for gaps against the Consent Order requirements
Independent Risk
Completed
5/6/2011
2.10
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/18/2011
2.11
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2.12
Draft amendments to existing charters and resolutions, or draft new charters and resolutions as needed
Legal
Completed
5/27/2011
2.13
Submit resolutions for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/1/2011
2.14
Submit resolutions to Citigroup Board for approval
Legal
Completed
6/6/2011
2.15
Submit approved resolutions to the FRB
Legal
Completed
6/13/2011
2.16
Establish Citigroup Mortgage Compliance Committee (Citigroup MCC)
Board
Completed
4/11/2011
Compliance
Committee
2.17
Revise Citigroup MCC Board resolution
Board
Completed
5/27/2011
2.18
Create new resolution as required for Citigroup MCC
Board
Completed
5/27/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 2
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
2a.1
Paragraph 2 (a) - Policies to be adopted by the board of
directors that are designed to ensure that the ERM
program provides proper risk management with respect
Risk Management
to CitiMortgage's and CitiFinancial's residential mortgage
and Operational
loan servicing, Loss Mitigation, and foreclosure activities,
Risk Policies
particularly with respect to compliance with Legal
Requirements, and supervisory standards and guidelines
as they develop
The Order
Paragraph 2 (b) - Policies and procedures to ensure that
the ERM program provides proper risk management of
independent contractors, consulting firms, law firms, or
other third parties who are engaged to support
residential mortgage loan servicing, Loss Mitigation, or
foreclosure activities or operations, including their
compliance with the Legal Requirements and Citigroup's
internal policies and procedures, consistent with
supervisory guidance of the Board of Governors
The Order
Workplan
Citi Supplier
Selection and
Management
Policies
Workplan
Paragraph 2 (c) - Steps to ensure that Citigroup's ERM,
audit, and compliance programs have adequate levels
and types of officers and staff dedicated to overseeing
CitiMortgage's and CitiFinancial's residential mortgage
Staffing Adequacy
loan servicing, Loss Mitigation, and foreclosure activities,
as applicable, and that these programs have officers and
staff with the requisite qualifications, skills, and ability to
comply with the requirements of this Order
The Order
Workplan
Task
Develop framework to evaluate risk management policies against Consent Order requirements at Citigroup Board level
As of 7/12/2011
Functional Lead
Status
Due Date
Independent Risk
Completed
5/6/2011
2a.2
Identify and inventory existing risk management policies at Citigroup Board level
Independent Risk
Completed
5/9/2011
2a.3
Assess existing risk management policies against the Consent Order requirements at Citigroup Board level
Independent Risk
Completed
5/13/2011
2a.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2a.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2a.6
Draft amendments to existing risk management policies, or draft new policies as needed
Independent Risk
Completed
6/30/2011
2a.7
Submit for approval under Deliverable Submission Review Process
Independent Risk
In Progress
7/20/2011
2a.8
Submit to the Risk Policy Coordination group
Independent Risk
Not Started
7/19/2011
2a.9
Submit Mortgage Servicing Oversight Policy to the Citigroup Board for approval and adoption
Independent Risk
Not Started
8/9/2011
2a.10
Provide amended and/or new policies to FRB in progress report, if required
Legal
Not Started
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
2b.1
Develop framework to evaluate policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/6/2011
2b.2
Identify and inventory existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/9/2011
2b.3
Assess existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/13/2011
2b.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2b.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2b.6
Draft amendments to existing policies governing Third Party vendors, or draft new policies as needed
Operations & Technology
Completed
6/6/2011
2b.7
Submit amendments for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/6/2011
2b.8
Submit amendments to the Citi Policy Committee for approval, as required
Independent Risk
Completed
6/8/2011
2b.9
Submit amended policy to the Citigroup Board for review
Independent Risk
Completed
6/10/2011
2b.10
Submit relevant policies to the FRB
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
2c.1
Develop framework to evaluate staffing adequacy against Consent Order requirements
Human Resources
Completed
5/16/2011
2c.2
Communicate the Staffing Adequacy Framework to Covered Business Units
Human Resources
Completed
5/16/2011
2c.3
Assess Covered Business Units for gaps using Staffing Adequacy Framework
Human Resources
Completed
6/30/2011
2c.4
Review and discuss identified gaps with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.5
Develop staffing gap remediation with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.6
Develop enhanced staffing plan based on gaps
Human Resources
Completed
6/30/2011
2c.7
Submit staffing plan for approval under Deliverable Submission Review Process
Human Resources
Not Started
7/22/2011
2c.8
Develop staffing adequacy metrics
Human Resources
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 3
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 2 (d) - Steps to improve the information and
reports that will be regularly reviewed by the board of
directors or authorized committee of the board of
dire+A109ctors regarding residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities and
operations, including, compliance risk assessments, and
the status and results of measures taken, or to be taken,
to remediate deficiencies in residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities, and
to comply with this Order
The Order
Workplan
Board Monitoring
MIS and
Remediation
Tracking
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
2d.1
Identify MIS Objectives for Board Mortgage Servicing Information Package, against key areas covered in the Consent Order
requirements
Independent Risk
Completed
5/9/2011
2d.2
Design Board Mortgage Servicing Information Package
Independent Risk
Completed
5/13/2011
2d.3
Review requirements with data producers for metrics feasibility and generation
Independent Risk
Completed
5/20/2011
2d.4
Determine required systems and technology to produce Board Mortgage Servicing Information Package
Technology
Completed
5/20/2011
2d.5
Validate enhanced Board Mortgage Servicing Information Package sample with key users and Executive Sponsor
Independent Risk
Completed
5/27/2011
2d.6
Produce enhanced sample of Board Mortgage Servicing Information Package with metrics
Independent Risk
Completed
6/20/2011
2d.7
Submit Board Mortgage Servicing Information Package for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/27/2011
2d.8
Integrate Citigroup MCC's feedback into the Board Mortgage Servicing Information Package
Independent Risk
Not Started
7/15/2011
2d.9
Include Board Mortgage Servicing Information Package in first Board status report
Independent Risk
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Due Date
Paragraph 3 - Risk Management
Paragraph 3 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its ERM program with respect to its
oversight of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations. The
Risk Management
enhanced program shall be based on an evaluation of
the effectiveness of Citigroup's current ERM program in
the areas of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations, and
recommendations to strengthen the risk management
program in these areas.
The Order
Workplan
Risk Management
Organization
Paragraph 3 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the fundamental elements
of the risk management program and any enhancements
or revisions thereto, including a comprehensive annual
risk assessment, encompass residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities;
The Order
Committee
Structure
Workplan
3.1
Conduct an evaluation of the effectiveness of CitiGroup's current risk management program for Mortgage Servicing Activities
to identify enhancements needed
In Business Risk
Completed
6/10/2011
3.2
Report the recommended enhancements to the Executive Steering Committee (ESC)
In Business Risk
Completed
6/10/2011
3.3
Develop an action plan to enhance risk management for Mortgage Servicing Activities based on the findings of the
effectiveness evaluation
In Business Risk
Completed
6/10/2011
3.4
Verify that ICG has sold (to 3rd party) or transferred to CMI any loans where Citi owns the servicing rights
In Business Risk
Not Started
9/10/2011
3.5
Establish process to ensure that on an ongoing basis any loans that are purchased by ICG where Citi owns the servicing rights
are either sold (to 3rd party) or transferred to CMI within 90 days of purchase
In Business Risk
In Progress
8/3/2011
3.6
Submit the action plan for approval through the Deliverable Submission Review Process
In Business Risk
Completed
6/6/2011
3.7
Submit the action plan to the FRB
Legal
Completed
6/13/2011
3.8
Implement the action plan
Independent Risk
In Progress
8/11/2011
Functional Lead
Status
Due
Independent Risk
Completed
6/6/2011
Submission Ref
Task
3a.1
Appoint a Consumer Mortgage Specialist in Independent Risk
3a.2
Ensure that an In-Business SORM is identified or hired for the U.S. mortgage servicing businesses
Operational Risk
Management
Completed
7/1/2011
3a.3
Ensure Head of Mortgage O&T, CitiMortgage Chief Customer Officer, and CitiMortgage Chief Legal Counsel are identified or
hired
CitiMortgage Risk
Completed
6/10/2011
3a.4
Draft new or enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk
Committees, and the NA Consumer Risk Committee
In Business Risk
Completed
6/17/2011
3a.5
Refine enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk Committees,
and the NA Consumer Risk Committee
In Business Risk
Completed
7/1/2011
3a.6
Submit enhanced ESC mandate and charter to for approval, pursuant to the Deliverable Submission Review Process
CitiMortgage Risk
Not Started
7/15/2011
3a.7
Obtain ESC mandate and charter approval
CitiMortgage Risk
Not Started
8/11/2011
3a.8
Submit enhanced NA Consumer Risk Committee mandate and charter for approval, pursuant to the Deliverable Submission
Review Process
Independent Risk
Not Started
7/15/2011
Independent Risk
Not Started
8/11/2011
In Business Risk
Not Started
7/15/2011
In Business Risk
Not Started
8/11/2011
Functional Lead
Status
Due
3a.9
Obtain NA Consumer Risk Committee mandate and charter approval from Citi CRO
3a.10
Submit enhanced REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters to ESC for approval, pursuant
to the Deliverable Submission Review Process
3a.11
Obtain REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters approval from ESC
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 4
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Staffing Oversight
3a.12
Refine enhancements to staffing adequacy and capacity plan oversight procedures
3a.13
Mortgage
Servicing
Operational
Procedures
Controls, Metrics
and Accountability
Paragraph 3 (a) Continued - The plan shall, at a
minimum, be designed to: (a) Ensure that the
fundamental elements of the risk management program
and any enhancements or revisions thereto, including a
comprehensive annual risk assessment, encompass
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities;
Third Party
Oversight
Change Control
Review and
Approval Process
Comprehensive
Annual Mortgage
Servicing Risk
Assessment
Process
Risk Management
Reports
The Order
Task
As of 7/12/2011
Functional Lead
Status
Due Date
In Business Risk
In Progress
7/31/2011
Create enhanced operational procedures and define new preventive controls for Mortgage Servicing Activities to prevent
service errors
Operations
In Progress
7/15/2011
3a.14
Draft enhancements for default management procedures, including customer communications (e.g., by implementing a single
point of contact), document management, loan modification, foreclosure and bankruptcy processing to improve process and
service quality
Operations
In Progress
7/15/2011
3a.15
Refine enhanced operational procedures
Operations
In Progress
7/31/2011
3a.16
Ensure enhanced operational procedures for key processes are in place
In Business Risk
Not Started
8/11/2011
3a.17
Identify key operational risk breakpoints and metrics
In Business Risk
Completed
7/1/2011
3a.18
Enhance controls for key operational risk or customer service breakpoints
In Business Risk
In Progress
8/11/2011
3a.19
Determine systems and technology enhancements in order to augment the enhanced operational risk controls
In Business Risk
In Progress
8/11/2011
3a.20
Validate QA approach and methodology for key breakpoints
Independent Risk
Not Started
7/15/2011
3a.21
Approve foreclosure law firms management framework, policies, and procedures
In Business Risk
Completed
6/10/2011
3a.22
Approve the third party management framework, policies and procedures
In Business Risk
Completed
6/12/2011
3a.23
Ensure In Business Risk involvement in the change control process (Section 3.3 of the Mortgage Servicing Compliance
Program) for significant process and systems changes
In Business Risk
In Progress
8/11/2011
3a.24
Develop draft methodology for conducting the Comprehensive Annual Mortgage Servicing Risk Assessment ("CAMSRA")
CitiMortgage Risk
Completed
6/2/2011
3a.25
Define role of Independent Risk in CAMSRA
Independent Risk
Completed
6/9/2011
3a.26
Finalize methodology for CAMSRA
CitiMortgage Risk
In Progress
7/25/2011
3a.27
Approve methodology for CAMSRA
In Business Risk
Not Started
8/11/2011
3a.28
Determine required enhancements to risk management reports and MIS for board ("MCC Operational Risk Dashboard"), and
senior management ("Executive Operational Risk Dashboard")
In Business Risk
In Progress
7/31/2011
3a.29
Determine systems and technology enhancements in order to augment the enhanced process and service quality
management reports
In Business Risk /
Technology
In Progress
8/11/2011
3a.30
Ensure risk management dashboards and MIS for board, senior management are in place
In Business Risk
Not Started
8/11/2011
Triggers for Key
Potential
Operating
Breakpoints
3a.31
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3a.32
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3a.33
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 5
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Compliance Risk
Paragraph 3 (b) - The plan shall, at a minimum, be
Management
Programs and
designed to (b) ensure that the risk management
Oversight at Large
program complies with supervisory guidance of the
Banking
Board of Governors, including, but not limited to, the
Organizations with
guidance entitled, "Compliance Risk Management
Complex
Programs and Oversight at Large Banking Organizations
Compliance
with Complex Compliance Profiles," dated October 16,
Profiles
2008 (SR 08-08/CA 08-11); and
(Also MRA 3, 5, 6)
The Order
Paragraph 3 (c) - The plan shall, at a minimum, be
designed to (c) establish limits for compliance, legal, and
reputational risks and provide for regular review of risk
limits by appropriate senior management and the board
of directors or authorized committee of the board of
directors.
The Order
Workplan
Process Risk
Indicators
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
3b.1
Ensure plan is in compliance with the guidance entitled “Rating the Adequacy of Risk Management Processes and Internal
Controls at State Member Banks and Bank Holding Companies” (SR 95-51 (SUP))
In Business Risk
Completed
6/10/2011
3b.2
Conduct an assessment of the ERM plan for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities
against the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with
Complex Compliance Profile," (SR 08-08/CA 08-11)
Independent Risk
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
3c.1
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3c.2
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3c.3
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
3c.4
Enhance reporting formats and reporting procedures to perform periodic reporting of loss norm variances for CMI to senior
management and the Board
Operational Risk
Management
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Paragraph 4 - Compliance Program
Paragraph 4 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its enterprise-wide compliance program
("ECP") with respect to its oversight of residential
mortgage loan servicing, Loss Mitigation, and foreclosure Enhanced ECP
Program
activities and operations. The enhanced program shall
(Also MRA 3, 5, 6)
be based on an evaluation of the effectiveness of
Citigroup's current ECP in the areas of residential
mortgage loan servicing, Loss Mitigation, and foreclosure
activities and operations, and recommendations to
strengthen the ECP in these areas.
The Order
Workplan
4.1
Conduct an assessment of the ECP for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities against
the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with Complex
Compliance Profile," (SR 08-08/CA 08-11)
Compliance
Completed
6/13/2011
4.2
Develop an action plan to enhance the ECP, based on the findings of the effectiveness evaluation
Compliance
Completed
6/13/2011
4.3
Submit for approval under Deliverable Submission review Process
Compliance
Completed
6/13/2011
4.4
Submit the action plan to enhance ECP to the FRB
Legal
Completed
6/13/2011
4.4
Implement the action plan
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 6
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Paragraph 4 (a) - The plan shall, at a minimum, be
designed to: (a) ensure that the fundamental elements of
ECP
the ECP and any enhancements or revisions thereto,
Fundamentals
including a comprehensive annual risk assessment,
(Also MRA 3, 5, 6)
encompass residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities
Submission Ref
Task
Functional Lead
Status
Due Date
4a.1
Develop Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.2
Approve enhanced Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.3
Formalize Governance over Compliance Program
Compliance
In Progress
8/11/2011
4a.4
Enhance comprehensive annual Compliance Risk Assessment for Mortgage Servicing
Compliance
In Progress
7/15/2011
4a.5
Develop Compliance Training Program Standards
Compliance
In Progress
8/11/2011
4a.6
Appoint Mortgage Product Compliance Director
Compliance
Completed
6/1/2011
4a.7
Adopt CER test plan approved by the Director of Mortgage Product Compliance
Compliance
In Progress
8/11/2011
4a.8
Define MIS and management reporting requirements to improve efficiency and effectiveness of Compliance and other control
functions
Compliance / Operations
/ Controls & Emerging
Risk
Completed
6/30/2011
4a.9
Establish ongoing analysis of staff competency and capacity
Compliance
In Progress
8/11/2011
4a.10
Implement Mortgage Servicing Compliance Program
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Compliance
Completed
6/13/2011
Controls & Emerging Risk
/ Compliance
In Progress
8/11/2011
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
The Order
Workplan
Submission Ref
Compliance with
Legal
Requirements and
Supervisory
Guidance
(Also MRA 3, 5, 6)
4b.1
Develop Mortgage Servicing Compliance Program Document
Paragraph 4 (b) - The plan shall, at a minimum, be
designed to: (b) ensure compliance with the Legal
Requirements and supervisory guidance of the Board of
Governors;
4b.3
Enhance Controls & Emerging Risk testing program
4b.4
Adopt enhanced scope and coverage of the regulatory requirements inventory
Workplan
Submission Ref
The Order
Paragraph 4 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that policies, procedures, and
processes are updated on an ongoing basis as
necessary to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors.
The Order
Updated Policies
and Procedures
(Also MRA 3, 5, 6)
Workplan
As of 7/12/2011
Task
Task
4c.1
Implement minimum standards to build a consistent regulatory change management framework across Mortgage Servicing
businesses at an enterprise level
Compliance
In Progress
8/11/2011
4c.2
Formalize existing change management process for regulatory changes, change in policies and procedures and business
process changes
Compliance
In Progress
8/11/2011
4c.3
Incorporate ongoing Legal notification system for regulatory / rules updates for US residential mortgages
Legal
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 7
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 5 - Audit
Paragraph 5 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance the internal audit program with respect
to residential mortgage loan servicing, Loss Mitigation,
and foreclosure activities and operations. The plan shall
be based on an evaluation of the effectiveness of
Citigroup's current internal audit program in the areas of
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities and operations, and shall include
recommendations to strengthen the internal audit
program in these areas.
Audit Plan
Submission
The Order
Workplan
Paragraph 5 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the internal audit program
encompasses residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities;
Scope of Audit
Program
(Also in MRA 1)
The Order
Workplan
Paragraph 5 (b) - The plan shall, at a minimum, be
designed to: (b) periodically review the effectiveness of
the ECP and ERM with respect to residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities,
and compliance with the Legal Requirements and
supervisory guidance of the Board of Governors;
Review
Effectiveness of
ECP and ERM
The Order
Workplan
5.1
Prepare the audit plan
ARR
Completed
6/6/2011
5.2
Submit the audit plan for approval through the Deliverable Submission Review Process
ARR
Completed
6/10/2011
5.3
Submit the audit plan to the FRB
Legal
Completed
6/13/2011
5.4
Implement the audit plan
ARR
In Progress
8/11/2011
Submission Ref
Functional Lead
Status
Due
5a.1
Evaluate the effectiveness of Citigroup's current internal audit program in the areas of Mortgage Servicing Activities and
implement enhancements
Task
ARR
In Progress
8/11/2011
5a.2
Document results of our coverage assessment.
ARR
Completed
6/30/2011
5a.3
Modify the internal audit program for the assessment of mortgage servicing activities, based on the evaluation.
ARR
Completed
6/30/2011
5a.4
Begin execution of revised audit programs across Citi US Mortgage Servicers.
ARR
Completed
6/30/2011
5a.5
Coordinate coverage or establish horizontal reviews across all Citi US Mortgage Servicers.
ARR
In Progress
8/11/2011
5a.6
Develop framework for the periodic evaluation of emerging risks leveraging Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.7
Execute periodic evaluations of emerging risks and determine assessment type; Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.8
Develop audit program for Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.9
Conduct Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.10
Develop audit program for targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.11
Conduct targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.12
Develop data mining and retrievals that provide monitoring capabilities for ARR, CER or Business.
ARR
In Progress
8/11/2011
5a.13
Develop key risk indicators, including customer complaints, vendor performance and other indicators of emerging risks.
ARR
Not Started
8/11/2011
5a.14
Embed the use of data mining/automated testing that enables assessments across entire populations, for assurance reviews
executed under the revised audit program.
ARR
In Progress
7/15/2011
5a.15
Embed data mining and automated testing into new systems and processes; 'design in' versus 'built on' retrievals.
ARR
Not Started
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5b.1
Review and assess existing audit coverage of compliance and risk programs related to Mortgage Servicing Activities to identify
gaps in coverage.
ARR
In Progress
7/13/2011
5b.2
Develop ECP and ERM coverage plan, including scope and frequency of coverage, leveraging horizontal reviews across all
North America residential Real Estate Businesses
ARR
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 8
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 5 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that adequate qualified staffing
of the audit function is provided for residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities;
The Order
Workplan
Adequate
Qualified Staffing
(Also MRA 8)
Workplan
Paragraph 5 (d) - The plan shall, at a minimum, be
designed to: (d) ensure timely resolution of audit findings Timely Resolution
of Audit Findings
and follow-up reviews to ensure completion and
effectiveness of corrective measures;
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
5c.1
Prepare a Mortgage skills assessment across ARR divisions
ARR
Completed
5/31/2011
5c.2
Develop on-going ARR Mortgage training strategy
ARR
Completed
6/30/2011
5c.3
Define ARR Mortgage end-state organization, including headcount, seniority levels, skills, regional alignment and
responsibilities.
ARR
Completed
6/30/2011
5c.4
Create a Mortgage Managing Director position to assess and define globally consistent coverage, including coverage
strategies for Compliance, Risk and vendors and ensure adequacy of staff and training.
ARR
Completed
5/30/2011
5c.5
Assess if adequate resources are in place to support data retrieval initiatives within the Mortgage program.
ARR
Completed
6/30/2011
5c.6
Ensure adequate resources are in place to support data retrieval initiatives within the Mortgage based on assessment results
ARR
Completed
6/30/2011
5c.7
Recruit and hire resources or contract staff required to fulfill the end state organization.
ARR
In Progress
8/11/2011
5c.8
Increase use of guest reviewers for Mortgage reviews.
ARR
Not Started
8/11/2011
5c.9
Enforce completion of a minimum of 48 hours of training by ARR Consumer Staff, including industry specific training covering
Consumer emerging risks and new regulations to ensure that staff are alert to the potential requirements for targeted reviews.
ARR
In Progress
8/11/2011
Task
Submission Ref
Functional Lead
Status
Due
5d.1
Continuously drive completion of corrective action plans for mortgage related issues through the performance of follow up
reviews and escalation of issues.
ARR
In Progress
8/11/2011
5d.2
Ensure on-going escalation to Business Management of past due corrective actions, especially those delayed greater than 60
days through BRCC and AWG forums.
ARR
In Progress
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5e.1
Develop Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011 audit
committee meeting.
ARR
In Progress
7/15/2011
5e.2
Implement Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011
audit committee meeting.
ARR
In Progress
7/31/2011
Functional Lead
Status
Due
The Order
Workplan
Paragraph 5 (e) - The plan shall, at a minimum, be
designed to: (e) ensure that comprehensive
documentation, tracking, and reporting of the status and
resolution of audit findings are submitted to the audit
committee; and
Comprehensive
Documentation
and Tracking
The Order
Workplan
Submission Ref
Escalation
Procedures for
Resolving
Differences of
Opinion
5f.1
Ensure compliance with the current escalation process to ensure proper communication of any differences or exceptions in
issue resolution.
ARR
In Progress
7/31/2011
5f.2
Formalize the audit issue escalation process as warranted.
ARR
In Progress
7/31/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Paragraph 5 (f) - The plan shall, at a minimum, be
designed to: (f) establish escalation procedures for
resolving any differences of opinion between audit staff
and management concerning audit exceptions and
recommendations, with any disputes to be resolved by
the audit committee.
The Order
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 9
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 6 - CitiFinancial Activities
Plan for
Strengthening
Coordination of
Loss Mitigation
Communication
with Borrowers
Review for
Impediments to
Loss Mitigation
Process
Paragraph 6 - Within 60 days of this Order, CitiFinancial
shall submit to the Reserve Bank an acceptable written
plan for strengthening coordination of communications
with borrowers, both oral and written, related to Loss
Mitigation and foreclosure activities to ensure that
CFNA Employee
communications are timely and effective, are designed to Incentives Review
avoid confusion to borrowers, to ensure continuity in the
handling of borrowers' loan files during the Loss
Mitigation and foreclosure processes by personnel
knowledgeable about the borrower's situation, and to
ensure that decisions concerning Loss Mitigation options
or programs continue to be made and communicated in
a timely fashion. Prior to submitting the plan,
CitiFinancial shall conduct a review to determine (i)
whether processes involving past due mortgage loans or
OCC IX a
foreclosures overlap in such a way that they may impair
OCC IX h
or impede a borrower's efforts to effectively pursue a
Loss Mitigation option or program, and (ii) whether
employee incentive compensation practices discourage
Loss Mitigation. The plan shall provide for at least the
same level of coordination of communications with
borrowers as the level that the Bank and CitiMortgage
are required to maintain in their Consent Order with the
OCC.
OCC IX b
The Order
Workplan
6.1
Develop a plan for strengthening coordination of Loss Mitigation communication with borrowers, as required
CFNA
Completed
5/10/2011
6.2
Submit plan for approval under Deliverable Submission Review Process
CFNA
Completed
6/6/2011
6.3
Submit plan to the FRB
Legal
Completed
6/13/2011
6.4
Implement plan for strengthening coordination of Loss Mitigation communication with borrowers
CFNA
In Progress
8/11/2011
6.5
Review CitiFinancial's relevant policy and procedures, branch training materials, standard customer letters and billing
statements, as well as interviews with key business managers for impediments to Loss Mitigation process
CFNA
Completed
5/5/2011
6.6
Review current incentive compensation practices to determine if they in any way discourage loss mitigation
CFNA
Completed
5/5/2011
6.7
Report results of the review to senior managers and obtain their concurrence on current compensation practices
CFNA
Completed
5/5/2011
6.8
Assess and review current policies and procedures as they relate to OCC IX
CFNA
Completed
5/5/2011
6.9
Augment policies and procedures to direct branch managers to place a hold on any account where a borrower is actively
pursuing loss mitigation with CitiFinancial
CFNA
Completed
7/25/2011
6.10
Augment policies and procedures to direct branch managers to place a hold on a borrowers account until any complaint
covering denial of a loss mitigation request is addressed
CFNA
Completed
7/25/2011
6.11
Implement quality control testing to ensure that branch managers appropriately place holds on accounts to prevent them from
transferring to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.12
Implement for existing branch audits, a review of whether branch managers appropriately place holds on accounts to prevent
servicing transfer to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.13
Develop a plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
7/15/2011
6.14
Implement the plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
8/1/2011
6.15
CitiFinancial will augment its policies and procedures to require formally that Branch Managers communicate all final Loss
Mitigation decisions to borrowers orally within 10 days of such decision.
CFNA
Completed
7/25/2011
6.16
Augment policy and procedures requiring branch managers to send any borrower who requests loss mitigation, a letter within
48 hours explaining required documentation and notifying borrower of the 30 day deadline for submitting required
documentation
CFNA
Completed
7/25/2011
6.17
CitiFinancial will improve these policies and procedures to require Branch Managers to send borrowers who are denied second
mortgage modifications a written notice of adverse action within 48 hours of the decision.
CFNA
Completed
8/1/2011
6.18
CitiFinancial will implement quality control testing to ensure that Branch Managers send borrowers timely letters explaining
Loss Mitigation documentation requirements, timelines, and decisions.
CFNA
In Progress
8/1/2011
6.19
Implement additional branch audit processes to determine if branches send borrowers timely letters explaining loss mitigation
documentation requirements, timelines and decisions
CFNA
In Progress
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 10
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 6 (Continued) - Within 60 days of this Order,
CitiFinancial shall submit to the Reserve Bank an
acceptable written plan for strengthening coordination of
communications with borrowers, both oral and written,
related to Loss Mitigation and foreclosure activities to
ensure that communications are timely and effective, are
designed to avoid confusion to borrowers, to ensure
continuity in the handling of borrowers' loan files during
the Loss Mitigation and foreclosure processes by
personnel knowledgeable about the borrower's situation,
and to ensure that decisions concerning Loss Mitigation
options or programs continue to be made and
communicated in a timely fashion. Prior to submitting
the plan, CitiFinancial shall conduct a review to
determine (i) whether processes involving past due
mortgage loans or foreclosures overlap in such a way
that they may impair or impede a borrower's efforts to
effectively pursue a Loss Mitigation option or program,
and (ii) whether employee incentive compensation
practices discourage Loss Mitigation. The plan shall
provide for at least the same level of coordination of
communications with borrowers as the level that the
Bank and CitiMortgage are required to maintain in their
Consent Order with the OCC.
Workplan
OCC IX c
OCCIX d
OCC IX e
OCC IX l
Submission Ref
Functional Lead
Status
Due Date
6.20
Implement additional branch audit processes to determine if branches appropriately direct borrowers whose servicing was
transferred to CitiMortgage Default Servicing
CFNA
In Progress
8/1/2011
6.21
Develop customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
7/25/2011
6.22
CitiFinancial will augment its policies and procedures to require that, when a borrower calls a CitiFinancial branch after the
servicing of the account has been transferred to CitiMortgage, the CitiFinancial branch manager will contact CitiMortgage with
the borrower on the line, subject to the borrower's permission, to transfer the call to CitiMortgage Default Servicing.
CFNA
Completed
8/1/2011
6.23
Implement customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
8/1/2011
6.24
Enhance policies and procedures to identify the Branch Manager of each CitiFinancial branch as the single point of contact for
borrowers whose accounts are serviced by that branch and who request loss mitigation.
CFNA
Completed
8/1/2011
6.25
Written communications with borrowers who request Loss Mitigation will contain the name and contact information of their
Branch Manager, along with information for borrowers to contact other CitiFinancial branch employees in the event the Branch
Manager is unavailable.
CFNA
Completed
8/1/2011
6.26
Update systematic HUD homeownership counseling letter sent to borrowers at 40 days delinquent to include loss mitigation
options which explains to customers that modification options are available to borrowers
CFNA
Completed
7/30/2011
6.27
Reclassify training programs regarding mortgage delinquencies, loss mitigation, and loan modification from "suggested' to
"required" for all employees
CFNA
Completed
7/1/2011
6.28
Implement quality control testing to ensure branch managers appropriately send borrowers adverse action letters containing
reasons for the denial of the borrowers loan modification request
CFNA
In Progress
8/1/2011
6.29
Implement additional branch audit processes to determine if branch manager appropriately send borrowers adverse action
letters containing reason for denial
CFNA
In Progress
8/1/2011
6.30
Inclusion of local branch manager contact information on adverse action letters sent to borrowers denied loan modifications
CFNA
Completed
7/25/2011
OCC IX i
6.31
Inclusion of a toll free customer complaint hotline on the CitiFinancial self service website will facilitate borrowers calling to file
or escalate borrower complaints regarding loss mitigation, loan modification or foreclosure activities
CFNA
Completed
8/1/2011
OCC IX j
6.32
Monitor customer complaints concerning loss mitigation and establish a key risk indicator that will trigger targeted reviews to
branches
CFNA
Completed
8/1/2011
6.33
Ensure CitiFinancial has quality control testing to ensure that payments made to branches are appropriately posted and any
misapplication of funds is corrected in an appropriate and timely manner.
CFNA
Completed
6/30/2011
6.34
Implement quality control testing to ensure that branch managers appropriately track and maintain borrower loan files, and that
branch managers timely notify borrowers of missing documents
CFNA
Completed
8/1/2011
6.35
Implement additional branch audit processes to determine if branch employees appropriately track and maintain borrower loan
files, and that branch employees timely notify borrowers of missing documents
CFNA
In Progress
8/1/2011
OCC IX n
6.36
Augment or draft new policy to ensure that all junior liens owned by CitiFinancial are taken into consideration when analysis of
a loan modification begins on a CitiFinancial first mortgage
CFNA
Completed
8/1/2011
Workplan
Submission Ref
Task
Functional Lead
Status
Due
OCC IX f
OCC IX g
OCC IX k
OCC IX m
The Order
Task
As of 7/12/2011
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 11
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
7.1
Updated policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities only
7.2
Submit policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities
As of 7/12/2011
Functional Lead
Status
Due Date
Compliance
Completed
5/27/2011
CFNA
Completed
5/27/2011
Paragraph 7 - CitiFinancial Activities
Execute New SLA
Between
CitiFinancial and
Paragraph 7 - Within 45 days of this Order, CitiFinancial
CMI
shall submit to the Reserve Bank acceptable policies and
Establish
procedures for the oversight of foreclosure activities
Oversight
performed by CitiMortgage on behalf of CitiFinancial.
Committee
The policies and procedures shall, at a minimum, provide
for appropriate oversight of CitiMortgage's foreclosure
activities with respect to residential mortgage loans
otherwise serviced by CitiFinancial to ensure that
CitiMortgage complies with the Legal Requirements.
The Order
7.3
Draft Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/15/2011
7.4
Execute Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/31/2011
7.5
Establish Oversight Committee
CFNA
Completed
6/30/2011
7.6
Create template for reporting material concerns
CFNA
In Progress
7/31/2011
7.7
Obtain CMI Scorecards (Law Firms and Third Party Vendors)
CFNA
Completed
6/30/2011
Hire Oversight
Relationship
Manager
7.8
Create job description for Oversight Relationship Manager (RM)
CFNA
Completed
5/27/2011
7.9
Hire RM or designate interim RM
CFNA
Completed
6/9/2011
Schedule
Oversight
Committee
Meetings
7.10
Schedule quarterly internal meetings
CFNA
Completed
6/9/2011
7.11
Schedule quarterly meetings with CMI
CFNA
In Progress
7/31/2011
7.12
Schedule twice-yearly on-site reviews of CMI
Workplan
Submission Ref
Enhanced ERM
Program
8b.1
Adopt and implement the plan approved by the FRB to enhance the enterprise-wide risk management (ERM) program for the
U.S. Residential Mortgage Servicers
Enhanced ECP
Program
8b.2
Adopt and implement the plan approved by the FRB to enhance the ECP program
8b.3
Adopt and implement the plan approved by the FRB to enhance the Internal Audit program
8b.4
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
8b.5
Workplan
Submission Ref
Develop
Processes for
Remote Reviews
of CMI
CFNA
In Progress
7/31/2011
Functional Lead
Status
Due
In Business Risk
Not Started
Within 10 Days of FRB
Approval
Compliance
Not Started
Within 10 Days of FRB
Approval
ARR
Not Started
Within 10 Days of FRB
Approval
Adopt and implement written plan, approved by the FRB, for strengthening communication with borrowers
CFNA
Not Started
Within 10 Days of FRB
Approval
Adopt and implement policies and procedures, approved by the FRB, in accordance with the CFNA oversight plan
CFNA
Not Started
Within 10 Days of FRB
Approval
Task
Paragraph 8 - Approval, Implementation, and
Progress Reports
Paragraph 8b - Within 10 days of approval by the
Reserve Bank, Citigroup and CitiFinancial, as applicable, Enhanced Internal
Audit Program
shall adopt the approved plans, policies, and
procedures. Upon adoption, Citigroup and CitiFinancial,
Enhanced
as applicable, shall implement the approved plans,
Borrower
policies, and procedures, and thereafter fully comply with
Communication
them.
Plan
The Order
Paragraph 8c - During the term of this Order, the
approved plans, policies, and procedures shall not be
amended or rescinded without the prior written approval
of the Reserve Bank.
The Order
Amendment
Requests
Workplan
Functional Lead
Status
Due
8c.1
Draft proposed changes to approved plans, policies, and procedures, as necessary
Legal
Not Started
Ongoing
8c.2
Submit proposed changes to approved plans, policies, and procedures for approval under the Deliverable Submission Review
Process, as necessary
Legal
Not Started
Ongoing
8c.3
Request written approval for proposed changes to approved plans, policies, and procedures from the FRB, as necessary
Legal
Not Started
Ongoing
Functional Lead
Status
Due
Submission Ref
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 12
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 8d - During the term of this Order, Citigroup
and CitiFinancial, as applicable, shall revise the
approved plans, policies, and procedures as necessary
to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors. The revised plans, policies, and procedures
shall be submitted to the Reserve Bank for approval at
the same time as the progress reports described in
paragraph 9 of this Order.
The Order
Workplan
Revision to the
Approved Plans,
Policies, and
Procedures
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Operations
Not Started
Ongoing
8d.1
Obtain revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance from
repository, as necessary (Citigroup and CFNA)
8d.2
Submit revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to Boards,
as necessary (Citigroup and CFNA)
Legal
Not Started
Ongoing
8d.3
Attach revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to progress
reports for submission to the FRB, as necessary (Citigroup and CFNA)
Legal
Not Started
With progress reports
Submission Ref
Task
Functional Lead
Status
Due
6/10/2011
Paragraph 9 - Approval, Implementation, and
Progress Reports
Paragraph 9 -Within 30 days after the end of each
Compliance
Committee
calendar quarter following the date of this Order,
Progress Reports
Citigroup's and CitiFinancial's boards of directors, or
authorized committee of the boards of directors, shall
jointly submit to the Reserve Bank written progress
reports detailing the form and manner of all actions taken
to secure compliance with the provisions of this Order
and the results thereof.
Monitoring
Implementation
The Order
Workplan
9.1
Evaluate Compliance Committee Progress Report requirements as per the Consent Order
Independent Risk / PMO
Completed
9.2
Design template for written Progress Report as per Consent Order requirements
PMO
Completed
6/20/2011
9.3
Validate Progress Report template with key stakeholders
PMO
Completed
6/25/2011
9.4
Produce Initial Progress Report
PMO
Completed
7/10/2011
9.5
Submit Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
7/15/2011
9.6
Submit Progress Report to Citigroup Board for review and approval
PMO
Not Started
7/20/2011
9.7
Submit first quarterly Progress Report to FRB
Board / Legal / MCC
Not Started
8/1/2011
9.8
Produce second quarterly Progress Report
PMO
Not Started
10/10/2011
9.9
Submit second quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
10/15/2011
9.10
Submit second quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
10/20/2011
9.11
Submit second quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
10/31/2011
9.12
Produce third quarterly Progress Report
PMO
Not Started
1/10/2012
9.13
Submit third quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
1/15/2012
9.14
Submit third quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
1/20/2012
9.15
Submit third quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
1/30/2012
9.16
Produce future Progress Reports for FRB submission quarterly, as required
PMO
Not Started
As Required
9.17
Submit future quarterly Progress Reports for approval under Deliverable Submission Review Process
PMO
Not Started
As Required
9.18
Submit future Progress Reports to Citigroup Board
Board / Legal / MCC
Not Started
As Required
9.19
Submit future Progress Reports to the FRB
Board / Legal / MCC
Not Started
As Required
9.20
Develop status reporting after 60 day submission
PMO
Completed
6/15/2011
9.21
Develop Board status reporting calendar
PMO
Completed
7/1/2011
9.22
Submit Board status report to the MCC for review
PMO
Completed
7/5/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 13
Appendix 4 –
Glossary
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Glossary of Terms
2MP
Second Lien Modification Program
ARR
Audit and Risk Review
Bank
Citibank, N.A.
BISO
Business Information Security Officer
BP&A
Business Planning & Analysis
BRCC
Business Risk Compliance and Control Committee
BSA
Branch Self-Assessment (CitiFinancial)
CAMBRS
Citi Anti-Money Laundering Business Rule Standards
CAP
Corrective Actions Plan
CARA
Compliance Annual Risk Assessment
CARE
Customer Account, Research, and Escalation Unit (CitiFinancial)
CASP
Citi Approved Supplier Program
CBNA
Citibank, N.A.
CER
Control and Emerging Risk
CIP
Compliance Implementation Plan
CISS
Citi Information Security Standards
Citi
Citigroup, Inc. and its subsidiaries
Citibank
Citibank, N.A.
Citigroup
Citigroup, Inc.
CitiFinancial
CitiFinancial Credit Corporation
CitiMortgage
CitiMortgage, Inc.
CMAC
Capital Markets Product Approval Committee
CMR
Center Manager Review (CitiFinancial)
Consent Orders
The FRB Order and the OCC Order, collectively
Covered Business Unit
For purposes of this document, Mortgage Servicing operations,
including collections, loss mitigation, foreclosure operations,
Independent Risk, In-business Risk, CER, and Compliance
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
CPAC
Consumer Product Approval Committee
CPB
Citibank Private Bank
CRMS
Corporate Resolution Management System (MERS)
CSA
Center Self-Assessment (CitiFinancial)
CSS
Citi Shared Services
CSSMP
Citi Supplier Selection and Management Policy
CTU
Central Testing Unit
Deliverable Submission
Review Process (DSRP)
Deliverables requiring approval prior to going to the MCC go
through the tollgate process (as necessary), the IC, the ESC, and
the SEOC (as necessary)
DERU
Default Executive Response Unit
DMR
District Manager Review (CitiFinancial)
DRI
Document Retrieval System (CitiMortgage)
ECP
Enterprise-Wide Compliance Program
ERM
Enterprise-Wide Risk Management
ERU
Executive Response Unit
FTE
Full time equivalent
FRB
Board of Governors of the Federal Reserve System
FRB Order
The Consent Order issued on April 13, 2011, by the Board of
Governors of the Federal Reserve System in the matter of
Citigroup Inc. and CitiFinancial Credit Company
FRB SR 08-8
The Reserve Bank Supervision and Regulation Letter titled
“Compliance Risk Management Programs and Oversight at Large
Banking Organizations with Complex Compliance Profiles”
GLMS
Global Learning Management System
GSE
Government Sponsored Enterprise
GSM
Global Securitized Markets
HAMP
Home Affordable Modification Program
HR
Human Resources
iCAPS
Citi’s centralized issue and tracking system
ICG
Institutional Clients Group
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
KRI
Key Risk Indicator
Legal Requirements
All applicable state and federal laws (including the U.S.
Bankruptcy Code and the SCRA), rules, regulations, and court
orders, as well as MERS Membership Rules, servicing guides with
GSE or investors, and other contractual obligations, including
those with the Federal Housing Administration and those required
by HAMP, and loss share agreements with the Federal Deposit
Insurance Corporation
LMS
Learning Management System (CitiFinancial)
Loss Mitigation
Activities related to special forbearances, repayment plans,
modifications, short refinances, short sales, cash-for-keys and
deeds-in-lieu of foreclosure that involve non-performing
residential mortgage loans
MAC
Modification Assessment Control
MCC
Mortgage Compliance Committee
MCS
Most Critical Supplier
MERS
MERSCORP, Inc. and MERS, Inc., collectively
MERS Requirements
MERS membership rules, terms, and conditions
MIS
Management Information Systems
Mortgage Servicing
Activities
The U.S. residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities that are the subject of the Consent Orders
MPC Director
Director of Mortgage Product Compliance
MSD
CitiMortgage Master Servicing Department
NTC
Nationwide Title Clearing
O&T
Operations & Technology
OCC
Office of the Comptroller of the Currency
OCC Order
The Consent Order, issued on April 13, 2011, by the OCC, in the
matter of Citibank, N.A.
OLM
Online Manual
ORM
Operational Risk Management
OSP
Outsource Service Provider
PMO
Project Management Office
QA
Quality Assurance
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
QC
Quality Control
RCSA
Risk Control Self Assessment
REL
Real Estate Lending
REOSC
Real Estate Operations Steering Committee
RESC
Real Estate Steering Committee
Reserve Bank
Federal Reserve Bank of New York
Risk Management &
Control Programs
Citi’s enterprise-wide risk management, compliance, and internal
audit programs, collectively
RMFC
Risk Management and Finance Committee
RRI
Regulatory Requirements Inventory
RRM
Regulatory Risk Matrix
SCC
Servicing Compliance Committee
SCM
Strategic Cost Management
SCRA
Servicemembers Civil Relief Act
Servicers
Third parties who own servicing rights
SLA
Service-Level Agreement
SME
Compliance Subject Matter Expert
SORM
Senior Operational Risk Manager
SPOC
Single Point of Contact
TPISA
Third Party Information Security Assessment
U.S. Residential Mortgage All Citi businesses that service U.S. residential mortgage loans
Servicers
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Appendix 2 –
Narratives
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Paragraph 3 – Risk Management1
(3) Within 60 days of this Order, Citigroup shall submit to the Reserve Bank an acceptable
written plan to enhance its ERM program with respect to its oversight of residential
mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations. The
enhanced program shall be based on an evaluation of the effectiveness of Citigroup's current
ERM program in the areas of residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities and operations, and recommendations to strengthen the risk
management program in these areas.
Citi recently conducted an evaluation of the effectiveness of Citi’s current risk management
program for Mortgage Servicing Activities. Citi’s evaluation was structured to assess the design
and the effectiveness of the current risk management program, to determine the extent to which the
risk management program satisfies the requirements of the FRB Order, and to determine
appropriate enhancements to the risk management program where warranted. The evaluation
covered the following:
x
Organization and governance: Review the scope of the risk management program and
adequacy of existing senior management and Independent Control Function oversight. In
addition, the existing committee charters in CitiMortgage and CitiFinancial with risk
oversight roles and responsibilities were reviewed, in particular as they relate to the
processes that impact customer experience and outcomes, and oversight of third parties
that represent Citi (particularly law firms). An assessment of staffing adequacy is being
conducted by the businesses, Operations, In-Business Risk Management, and the control
functions; as a related matter, the committee structure and memberships will be enhanced
to ensure appropriate parity and cross functional participation;
1 This plan is accompanied by a cover letter that provides an overview of Citigroup’s response to the FRB Order
and that includes a glossary of terms and acronyms used but not defined herein.
We respectfully request, pursuant to 5 U.S.C. § 552(b) and 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8), that
confidential treatment be accorded this enclosure, and the confidential and privileged business, commercial, and
financial information it contains, as well as any transcripts, notes, memoranda, or other records created by, or at the
direction of, the Federal Reserve Bank of New York, its officers, or staff that reflect or relate to this confidential
information. We also respectfully request that you promptly inform us of any request under the Freedom of
Information Act seeking access to any of the information enclosed herewith, to permit us to substantiate the grounds
for confidential treatment.
We further note that this enclosure is protected by legal privileges, including but not limited to the attorney-client
and work product privileges. In accordance with 12 U.S.C. § 1828(x), we do not waive, and expressly preserve, all
such privileges and protections.
CONFIDENTIAL
x
Risk policies and processes: Review the independent control functions’ and In-Business
Risk’s policies and procedures, and Independent Risk controls, including third party
process control and oversight, breakpoints, Quality Control (transactional testing that
serves as a preventative control, conducted by Operations), Quality Assurance (detective
testing of quality controls based on statistical sampling, conducted by In-Business Risk)
and metrics, as well as the monitoring and testing of identified breakpoints; and
x
Risk infrastructure: Review of risk identification, measurement, reporting, and MIS,
including In-Business and Independent Risk senior management and committees’ risk
reports, as well as the systems facilitating risk identification and control.
As a result of this evaluation, management concluded that a number of existing operations and risk
management areas in Mortgage Servicing should be enhanced. Citi will take several measures to
strengthen the existing risk management framework and improve the oversight of the process and
customer service quality related to Mortgage Servicing Activities. Considering this framework
and the evaluation described above, ten systemic enhancements have been identified. Many of
these actions, as well as existing control processes, will require ongoing refinement to ensure
effective and efficient use of resources and appropriate management of risks. The enhancements
will cover four fundamental elements across Mortgage Servicing Activities:
A. Strengthening Organization and Governance;
B. Enhancing Operational and Customer Service-related Risk Processes;
C. Augmenting the Risk Infrastructure; and
D. Establishing Operational and Customer Service Quality Triggers.
Based on the evaluation, management developed this plan to enhance the mortgage servicing risk
management program for Mortgage Servicing Activities within Citi’s ERM program. The plan
will be documented in mortgage servicing risk management procedures. All action plans
described below will be accomplished within timeframes prescribed by the FRB Order.
The plan shall, at a minimum, be designed to:
3(a) Ensure that the fundamental elements of the risk management program and
any enhancements or revisions thereto, including a comprehensive annual risk review,
encompass residential mortgage loan servicing, Loss Mitigation, and foreclosure activities;
Citi will continue to rely on its “Three Lines of Defense” risk management framework as the
foundation to achieve compliance with the Legal Requirements and supervisory guidance as
defined in the FRB Order. The business (including Operations and In-Business Risk), as the first
line of defense, will enhance and implement policies, procedures, and controls. The second line of
defense is comprised of Compliance, Independent Risk, and CER. Compliance and Independent
Risk will monitor the control environment with additional staff in senior roles and with enhanced
MIS. CER will conduct independent testing. ARR, as the third line of defense, will validate
action plan tasks and execute ARR independent control testing programs. These three lines of
defense are further strengthened by the Human Resources, Finance, and Legal departments.
Cross-functional committees will enhance interaction and communication among the businesses
and control functions, provide a forum for escalation and strategic oversight, and enable greater
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CONFIDENTIAL
management of issues. Considering this framework and the evaluation described above, ten
systemic enhancements have been identified. Many of these actions, as well as existing control
processes, in line with our normal practice, may be refined over time to ensure effective and
efficient use of resources and appropriate management of risks.
A.
Strengthening Organization and Governance
Citi is strengthening the business model for its Mortgage Servicing Activities. This begins with
strengthening the depth and quality of its executive management team. Citi has appointed Mr.
Sanjiv Das, CEO of CitiMortgage, to be the accountable executive for oversight of its Mortgage
Servicing Activities. Supporting Mr. Das will be accountable executives representing Operations
and Technology, Legal, Risk Management, and Compliance.
1.
Create new management positions.
The First Line of Defense
To enhance governance, oversight, and accountability in the areas of Mortgage Servicing
Activities, the U.S. Residential Mortgage Servicers have implemented or will implement
staffing changes.
x
A new Head of Mortgage O&T position has been established, with end-to-end
responsibility for mortgage operations in CitiMortgage and a dedicated focus on
compliance and controls across Mortgage Servicing Activities. The new Head of
Mortgage O&T has been appointed and reports jointly into both the CEO of
CitiMortgage and the Head of NA O&T.
x
The new Global Operational Risk Management policy and the Mortgage Servicing
Compliance Program based on the Global Compliance Control Policy will be the
foundation for the enhancements to the in-business oversight of operational and
compliance risks in Mortgage Servicing Activities. Under this framework,
CitiMortgage, CitiFinancial, ICG, and CPB will be identifying or hiring Senior InBusiness Operational Risk Managers (“SORMs”) to ensure a focused effort to
monitor and address operational, compliance, and customer service risks.
The SORMs will receive operational risk Quality Control (QC) reports from the
business operations groups, and operational risk Quality Assurance (QA) reports
from In-Business Risk. SORMs will escalate risks, as needed, to the CEOs of Citi’s
U.S. Residential Mortgage Servicers, the in-business CRO, and to Independent
Risk. In addition, the SORM for CitiMortgage will ensure uniform implementation
of operational procedures across U.S. Residential Mortgage Servicing entities.
x
Recognizing the importance of customer experience, CitiMortgage has established
and filled the position of a Chief Customer Officer who is responsible for instituting
processes to enhance customer interactions, resolving customer issues, and acting as
the ombudsman for internal escalations as they relate to customer issues.
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CONFIDENTIAL
x
CitiMortgage has established a new position of CitiMortgage General Counsel to
act as a point person managing end-to-end legal matters related to Mortgage
Servicing Activities.
The Second Line of Defense
To further strengthen governance, oversight, and accountability in the Second Line of Defense,
the Independent Control Functions have identified or will identify new positions to oversee
Mortgage Servicing Activities.
x
Independent Risk has augmented oversight expertise with the creation of a
Consumer Mortgage Specialist position, reporting directly to the Consumer CRO.
The Consumer Mortgage Specialist has been hired and will represent Independent
Risk on the Real Estate Operations Steering Committee (“REOSC”), and will
provide oversight and ensure consistency across CitiMortgage, CitiFinancial, and
CPB. The Consumer Mortgage Specialist will work with SORMs within
CitiMortgage, CitiFinancial, and CPB on escalated operational risks issues. If
required, the Consumer Mortgage Specialist will further escalate the related issues
to the Consumer CRO and/or Global Operational Risk Management.
x
The Head of Compliance for Real Estate Lending has been additionally appointed
Mortgage Product Compliance Director (“MPC Director”), with responsibility for
Compliance activities and standards across U.S. Residential Mortgage Servicers.
The Third Line of Defense
x
2.
ARR has created a Managing Director position to enhance residential mortgage
loan servicing coverage and build a deep bench of professionals that has the stature
and technical expertise to influence a strong control culture. Recruiting is
underway and the incumbent will direct consistent and in-depth Residential
Mortgage Coverage.
Implement changes to the Committee structure.
The firm has made several changes designed to enhance governance and oversight, maintain
strong Risk Management & Control Programs, and ensure the safe, sound operation of the U.S.
residential mortgage loan business. Starting with the most senior levels, three new committees
have been formed, one at the Board level and two senior management forums that are crossfunctional and cross-business in nature. These three committees are explained in more detail
in the cover letter but are briefly described below:
x The Mortgage Compliance Committee (the “MCC”): The Board established the
MCC to oversee and monitor management’s actions to secure compliance with the
FRB Order. The MCC meets monthly, or more frequently at its discretion, to
receive reports from senior management regarding the Board Oversight Plan, the
status of the Enhancement Plans, and the Programs themselves.
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CONFIDENTIAL
x The Senior Executive Oversight Committee (the “SEOC”): The SEOC provides
strategic direction in the development, implementation, and communication of the
Plans; reviews and approves the budget and resources needed to ensure compliance
with the FRB Order; reviews key submissions and reports regarding plan status to
the MCC; and meets monthly, or at such other frequency as it determines, to receive
reports from the Executive Steering Committee relating to plan status or other
matters as the Committee deems appropriate.
x
The Executive Steering Committee (the “ESC”): The Executive Steering
Committee provides strategic direction in the development, implementation, and
communication of the Plans; reports to the Senior Executive Oversight Committee
and MCC regarding plan status; and reviews and approves key submissions and
reports to the MCC, the Board or the FRBNY regarding plan implementation, and
oversees the ongoing management of mortgage servicing-related risks across
businesses.
Additional components of the enhancements to the committee structure include:
x
The oversight of operational risk management for Mortgage Servicing Activities
will be explicitly built into the mandates of the business oversight committees and
control functions;
x
Changes to the mandates of the existing In-Business risk committees will be made
to strengthen oversight of operational risks across Mortgage Servicing Activities
and In-Business Risk operating procedures;
x
Changes to the mandate of the NA Consumer Risk Committee will require regular
reviews of the essential control elements within key businesses; and
x Creation of new committees at the business level (e.g., REOSC) is designed to
provide greater oversight and monitoring by senior management in Mortgage
Servicing Activities.
x
The Real Estate Operations Steering Committee (the “REOSC”): The REOSC is a
newly created, cross-business committee with the broad mandate to oversee and
manage compliance with relevant policies, laws, and regulations across Citi’s U.S.
Residential Mortgage Servicers. The REOSC will be attended by senior executives
from CitiMortgage, CitiFinancial, CPB, and ICG and enable consistency of
processes and actions across the businesses, as appropriate. REOSC will take
inputs concerning Mortgage Servicing Activities-related operational risks from the
various In-Business risk committees (e.g., CitiMortgage Operational Risk
Committee, CitiFinancial’s Risk Control Committee, and CPB’s Risk Committee),
escalate potential issues to the ESC, and oversee the execution of changes to the
operating models for Mortgage Servicing Activities as directed by the ESC.
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CONFIDENTIAL
Real Estate Operations Steering Committee
x
CitiMortgage SORM, Chairperson
x
Director of Mortgage Product Compliance
x
CitiMortgage CRO
x
Legal representative
x
CitiMortgage O&T representative
x
CitiFinancial business representative
x
CitiFinancial SORM
x
CPB business representative
x
ICG SORM
x
NA Consumer Bank business representative
x
CPB SORM
x
ICG business representative
x
Independent Risk Consumer Mortgage Specialist
x
ARR Representative (non-voting)
The REOSC will:
x Oversee compliance of Mortgage Servicing Activities with relevant policies, laws, and regulations related to operational and
compliance risks
x Identify any inconsistencies with respect to the identification, measurement, mitigation, and monitoring of operational,
compliance, legal, and reputational risks among businesses
x Review operational risk and compliance MIS, including the QC, QA results, and key risk indicators for operational breakpoints
across Mortgage Servicing Activities
x Review regular reports from the Director of Mortgage Product Compliance and other control functions
x Review and adopt policies and procedures in accordance with the Compliance Program
x Proactively identify control gaps related to emerging issues, anticipate similar problems, and develop action plans/projects to
mitigate future exposures
x Follow up on Corrective Action Plans and open control items
x Monitor current issues, assess and communicate cross-business impacts, and oversee related projects
x Escalate issues to the ESC, including inconsistent standards, lack of adherence to policies, significant risks, and inadequate
controls, as appropriate
x
The CitiMortgage Operational Risk Committee: Given that most of the Mortgage
Servicing Activities across the U.S. Residential Mortgage Servicers are centralized
in CitiMortgage, a new Operational Risk Committee will be created in
CitiMortgage to oversee the management of operational and compliance risks in the
business and the identification, measurement, mitigation, and monitoring of these
risks. It will also monitor the adequacy of the controls in O&T to ensure the highest
standards of process and service quality for Mortgage Servicing Activities across
businesses and share findings with the CitiMortgage Risk Committee.
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CONFIDENTIAL
CitiMortgage Operational Risk Committee
x
CitiMortgage SORM, Chairperson
x
Compliance representative
x
CitiMortgage CRO
x
Legal representative
x
CitiMortgage CFO
x
Head of Default Operations Collections
x
Head of Mortgage O&T
The ORC will:
x Oversee the identification, measurement, mitigation, and monitoring of key operational, compliance legal, and reputational risks
x Review In-Business third party management procedures to ensure proper risk management of independent contractors, consulting
firms, law firms, and other third parties
x Review the efficacy of current operational procedures in mortgage operations
x Review staff adequacy in mortgage operations
x Monitor customer experience and customer complaints
x Review operational risk MIS, including key operating performance metrics, QC and QA results
x Monitor adherence to approved tolerance thresholds for key operational breakpoints
x Monitor compliance with operational risk policies and procedures, corporate policies, and regulatory/legal requirements
x Review compliance and audit results as they relate to operational risk in the mortgage business
x Escalate risks and issues to CitiMortgage Risk Committee and REOSC
In addition to the creation of new committees, the membership and mandate of In-Business
risk committees will be enhanced to include increased oversight of operational risk for U.S.
Residential Mortgage Servicers. The membership enhancements will ensure that the InBusiness SORMs and representatives from both Compliance and Legal are represented on
the committees. These In-Business risk committees are supported by an existing governance
framework on credit, fraud, market, and macroeconomic risks. Citi will strengthen the
mandates of these committees with respect to the governance of operational risks.
In addition, the mandate of the NA Consumer Risk Committee, which functions subject to the
Global Consumer Credit and Fraud Risk Policy (“GCCFRP”) and all other relevant Citigroup
and Global Consumer policies, will be enhanced to include increased oversight of operational
risk for Mortgage Servicing Activities and will conduct regular reviews of the essential control
elements within key businesses, including the following:
3.
x
Reviews that the QA / QC activities across businesses are effective;
x
Ongoing reviews of control MIS, including staffing, to highlight emerging trends;
x
Review of operational risks across businesses that may undermine the integrity of
the control framework; and
x
Presentation of recent activities and findings from other control functions.
Strengthen oversight by management of staffing adequacy and capacity plans.
Staffing adequacy assessments are being conducted across the businesses and the control
functions for each of their respective units as it pertains to Mortgage Servicing Activities,
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CONFIDENTIAL
along with a review of the membership structure of the various committees that will provide
further oversight and governance.
In line with the requirements of the GCCFRP and the additional requirements under the FRB
Order, In-Business Risk will expand its review and validation of the staffing capacity models
and workload assumptions related to Mortgage Servicing Activities. Independent Risk will
review staffing levels through its regular monitoring and processes.
B.
Enhancing Operational and Customer Service related Risk Processes
1.
Strengthen O&T operational procedures and controls for Mortgage Servicing Activities.
To strengthen mortgage servicing procedures for Mortgage Servicing Activities, CitiMortgage
and CitiFinancial O&T will define several new operating procedures, including procedures for
handling customer complaints, processing state level documentations, and loan modifications.
O&T will also define new operational controls, including preventative quality control,
IT/automation, training, and managerial controls in Mortgage Servicing Activities, to prevent
process errors. In addition, CitiMortgage and CitiFinancial O&T will enhance their default
management procedures, including customer communications (e.g., by implementing a single
point of contact), document management, loan modification, foreclosure, and bankruptcy
processing to improve process and service quality.
To support management in providing necessary oversight and control over specific Mortgage
Servicing Activities, In-Business Risk will review existing policies and procedures covering
Mortgage Servicing Activities to ensure comprehensive coverage of the key operational risks
associated with Mortgage Servicing Activities. In addition, standards and protocols to ensure
consistency in procedures across U.S. Residential Mortgage Servicers, and enhanced change
management methodologies, are being developed and cascaded to the procedure
owners. Operational policies and procedures will be maintained in a central repository, and the
procedures will be required to receive, at a minimum, an annual certification.
2.
Strengthen risk controls for process and customer service breakpoints.
The mortgage servicing risk management program will be enhanced to address controls,
metrics, and responsibilities for process “breakpoints” (defined as a process step deemed
critical that has the potential to create an adverse customer impact or expose the firm to
material risk if not carried out in accordance with policies and procedures) in Mortgage
Servicing Activities; service quality in customer facing functions, including the Single Point of
Contact for Loss Mitigation; and documentation accuracy in loan modification, foreclosure,
and bankruptcy areas. The controls in these areas will be improved through the use of
statistical sampling in quality assurance (QA) under In-Business Risk to detect and fix
systemic control gaps and a process to identify key breakpoints and metrics (to be managed by
In-Business Risk with oversight by Independent Risk and related control functions). The QA
approach / methodology will be approved by Independent Risk and executed by In-Business
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CONFIDENTIAL
Risk. QA for CitiFinancial is conducted by the Compliance Review Group consistent with and
pursuant to standards set by CitiFinancial Risk.
Ensuring comprehensive identification of key operational risk breakpoints and metrics.
The identification of key risks, their measurement, control, and mitigation, are essential steps
in the mortgage servicing risk management program. A preliminary review was undertaken to
identify key operational risk breakpoints along Mortgage Servicing Activities processes that
present a significant customer experience issue or operational risk. This initial list of
operational breakpoints will be the basis for enhancing operational risk controls, metrics,
tolerance thresholds, and MIS, and will be further refined through future risk assessments.
Key operational risk and customer experience breakpoints, where enhanced controls will be
implemented, are in the following areas: loan modification decisioning and documentation
tracking, notarization of affidavits, lost note affidavits, abandoned properties, MERS
assignments, law-firm work-load and concentration risk, and aging of customer complaint
resolution.
An inventory of operational risk metrics will be established for key breakpoints. Operational
risk metrics will be used to identify the occurrence of a risk event along a breakpoint, and a
staff member within In-Business Risk will be responsible for addressing potential issues.
Independent Risk will approve key operational risk metrics and will ensure that corrective
actions are being taken to address potential issues.
Enhancing controls for key operational risk or customer service breakpoints.
In-Business Risk will conduct quality assurance (QA) to mitigate operational risk, monitor QC
results, and produce controls MIS for review by In-Business risk committees, Independent
Risk, and Compliance.
Independent Risk will review the controls MIS provided by In-Business Risk, escalate
potential issues to the REOSC and other applicable committees, and ensure that appropriate
corrective actions are taken by management and monitor the progress of corrective actions.
As further described in our responses to Paragraphs 4 and 5 of the FRB Order, Compliance,
CER, and ARR programs will also be enhanced to ensure sufficient controls and testing are in
place for key breakpoints.
3.
Strengthen third party oversight.
Independent Risk will approve the third party management framework, policies, and
procedures being developed by the Business. In-Business Risk will participate in the third
party management process by: participating in third party and law firm oversight committees;
ensuring procurement and vendor management policies and procedures are in place and upto-date; and conducting ongoing third party management and oversight including vendor risk
assessment and rating. The authority to terminate a foreclosure law firm is vested in the Law
Firm Steering Committee. The General Counsel of U.S. Consumer & Commercial Banking,
or a designee approved by Legal, also will have the authority to terminate a law firm
relationship based on compliance, legal, reputational, or other risk concerns.
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CONFIDENTIAL
In the case of third-party providers (“TPP”), the authority to terminate is vested in the TPP
oversight committee. In addition to the TPP oversight committee, the Chief Risk Officer of
CitiMortgage’s mortgage business, or a designee approved by Independent Risk, also will
have the authority to terminate CitiMortgage’s relationship with a non-law firm TPP based
on compliance, performance, or other risk management concerns. Citi’s third party
management process is consistent with the risk management principles delineated in OCC
2001-47.
Our response to OCC Order Article V– Third Party Management contains more details on our
plan to enhance third party management and involvement by In-Business Risk and
Independent Risk.
4.
Enhance and/or document a change control review and approval process for significant
process and infrastructure changes.
Citi’s Mortgage Servicing Activity change control process will be enhanced as described in the
Citi Mortgage Servicing Compliance Program. In-Business Risk and SORMs will participate
in approving the change control process to ensure operational risk is taken into account in each
change request.
Citi’s U.S. Residential Mortgage Servicers will have a change control process that addresses
implementation of regulatory changes, changes in policies and procedures, and business
process changes. The change control process will be consistent with Citi’s overall change
management framework. Within this framework, Compliance is engaged in the review and
approval of all change control requests and supporting implementation plans. The framework
also requires a validation process to confirm the effectiveness of the change. For additional
information on the Regulatory Change Management process, refer to Section 3.3 of the
CitiMortgage Servicing Compliance Program.
5.
Establish the Comprehensive Annual Mortgage Servicing Risk Assessment process for
U.S. Residential Mortgage Servicers.
Citi is establishing a comprehensive annual mortgage servicing risk assessment process for
Mortgage Servicing Activities (the “CAMSRA”) conducted by In-Business Risk, including
SORMs, and will include both internal and third party operational risk areas. The objective
of this process will be to continuously improve risk management practices and raise
management awareness of risks to better inform relevant decision making. The CAMSRA
will incorporate the output from other control functions, in particular the Compliance Annual
Risk Assessment (“CARA”) related to Mortgage Servicing to enable In-Business Risk to
generate a holistic assessment of risk.
The focus of the CAMSRA will be to conduct a bottom-up assessment at least annually and
leveraging the following data sources such as regulatory guidance, output of assessments
conducted by other control functions, and management input on processes and risks.
The CAMSRA will include an assessment of inherent risk, strength of controls, and residual
risk. The output of the CAMSRA will consist of a report summarizing the key risks, including
- 10 -
CONFIDENTIAL
a color-coded representation of the risk ratings (“heat map”), as well as a plan to manage areas
with unacceptable residual risk or identified control deficiencies.
The process is fully owned by In-Business Risk, including SORMs, and supported by business
functions, as well as control and support functions. Independent Risk will review the output of
the CAMSRA. A summary of key findings and conclusions will be reported to the Board and
senior management.
C.
Augmenting the Risk Infrastructure
1.
Enhance risk management reports and MIS for Mortgage Servicing Activities.
In order to ensure appropriate controls, additional MIS will be provided to the Board, senior
management, Independent Risk, Compliance, and In-Business management. Key reporting
recipients, report types, and frequency of reports will be formalized. Risk reporting content
and structure will be standardized for Board and executive level reports in order to ensure
optimal tailoring of reports for the recipient. Additional risk management reports will be
designed as follows:
x
An MCC Operational Risk Dashboard (“MCC Dashboard”) will be designed and
implemented to ensure that the Board is able to effectively oversee risks in
Mortgage Servicing Activities. The MCC Dashboard will include operational risk
metrics, compliance risk issues, ARR results and plans, CER results and plans,
borrower experience, foreclosure metrics, vendor (including law firm) ratings and
exposures, loss mitigation metrics, and staffing adequacy metrics in relation to
Mortgage Servicing Activities. In addition, Board reporting will include updates on
major operational initiatives that either address risks or might pose additional risks,
and unresolved risks;
x
An Executive Operational Risk Dashboard (“Executive Dashboard”) will be
designed and implemented for use by mortgage senior management, cross-business
risk committees, In-Business risk committees as well as corporate risk committees
and Independent Risk. The Executive Dashboard will include details of key
operational risk breakpoints covering Mortgage Servicing Activities.
Citi will identify additional Reports at the Operating levels to enhance frontline controls.
Technology enhancements will be identified, and key IT system enhancements required to
fully integrate metrics into MIS will be added to the technology plan. Owners and MIS
sources will be determined for key operational risk metrics.
D.
Establishing Operational and Customer Service Quality Triggers
1.
Enhance triggers for key breakpoints.
Tolerance thresholds for process and service quality will be enhanced around key breakpoints.
In order to manage the risk exposure of the breakpoint, each risk metric for a specific
- 11 -
CONFIDENTIAL
breakpoint will be assigned a tolerance threshold to serve as an early indicator of potential
operational risks and risks associated with customer service quality. In-Business Risk will set
and monitor these thresholds, which will be approved by Independent Risk.
3(b) Ensure that the risk management program complies with supervisory
guidance of the Board of Governors, including, but not limited to, the guidance entitled,
“Compliance Risk Management Programs and Oversight at Large Banking Organizations
with Complex Compliance Profiles,” dated October 16, 2008 (SR 08-08/CA 08-11);
Citi has designed its overall risk management program for Mortgage Servicing Activities with the
objective of establishing governance, structure, and processes to support effective management of
risk across the enterprise. The framework is set forth in policies that uniformly call for key
program elements and segregation of duties. In designing its risk management programs, Citi
assesses and incorporates federal bank supervisory requirements, which can include formal written
guidance, the results of supervisory self assessments and examination results, and other sources of
information.
Federal bank regulatory guidance in FRB SR 08-8 was used as a guide for the evaluation of the
ECP, as were findings identified in the horizontal examination completed in the fourth quarter of
2010. The enhancements to Citi’s ECP are described in detail in the response to Paragraph 4 of the
FRB Order.
The mortgage servicing risk management program is also consistent with the supervisory guidance
delineated in FRB SR95-51. As explained in this overall response, the mortgage servicing risk
management program includes: (i) active board and senior management oversight; (ii) strong
processes for managing policies and procedures and limits; (iii) a framework for risk identification,
measurement, monitoring, and MIS; and (iv) comprehensive internal controls and audit.
3(c) Establish limits for compliance, legal, and reputational risks and provide for
regular review of risk limits by appropriate senior management and the board of directors
or authorized committee of the board of directors.
Citi is committed to complying with all applicable federal and state laws, rules, regulations,
applicable supervisory guidance, and Citi policies and corporate ethical standards. Consistent
with this commitment, Citi expects every manager and employee to adhere to the highest
standards of compliant and ethical conduct, and to foster an environment, culture, and reputation
for safe, sound, and compliant business practices. These commitments translate into the
principles that form the foundation of the management of legal, compliance, and reputational risk
at Citi.
Citi also designs its control environment with the objective of achieving these principles in
practice. This includes appropriate policies, procedures, controls, and independent assessment of
the performance of these controls to determine whether legal, compliance, and reputational risk
are being managed effectively. Through the CAMSRA, management will evaluate the
performance of controls and determine whether residual risk levels mandate remedial action or
escalation for senior management and Board review.
- 12 -
CONFIDENTIAL
As per FRB SR 08-8, “[c]ompliance Risk does not lend itself to similar [Market and Credit Risk]
processes for establishing and allocating overall risk tolerance, in part because organizations
must comply with applicable rules and standards.” FRB SR 08-8 expressly defines Compliance
Risk as the risk of legal or regulatory sanctions, financial loss, or damage to reputation resulting
from failure to comply with laws, regulations, rules, and other regulatory requirements. To help
manage these risks within Mortgage Servicing, Citi will establish in-business process risk
indicators that will help Citi identify performance anomalies. These indicators will be set by the
In-Business risk managers, including SORMs, and approved by Independent Risk (both
Operational Risk and Consumer Risk Management) with input from other Independent Control
Functions. These indicators, which will be reviewed at least annually, will include, amongst
other risks, legal, compliance, and reputational risks.
On an annual basis, ORM models “expected” loss norms for operational risk and allocates those
loss norms to express Citi’s overall operational risk tolerance. Variances from the expected loss
norms will be included in the reports to senior management and the Board of Directors, or
authorized committees of the Board of Directors, along with a description of the impact on
capital. The reports will include a description of thematic risks and appropriate corrective
actions or mitigants.
Independent Risk Officers may classify any product, process, or situation from which significant
ORM losses may arise, or any product, process, or situation that, if not addressed, may result in
significant adverse franchise or reputational damage. The Classification Process, which is
memorialized in the ORM Policy, includes provisions for escalation to the Board and specific
remedies which can, in the extreme, include a removal of managers and discontinuation of the
business.
- 13 -
Appendix 3 –
FRB Consent Order Action Plan
Federal Reserve Board Consent Order Action Plan
Federal Reserve Board
Consent Order Action Plan
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. § 261.14(a)(4), 261.14(a)(8)
SUBMITTED SUBJECT TO 12 U.S.C. § 1828(X)
Tuesday, July 12, 2011
CONFIDENTIAL - NOT FOR DISTRIBUTION
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 1
As of 7/12/2011
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Legal
Completed
5/27/2011
Independent Risk
Completed
5/28/2011
Legal
Completed
6/6/2011
Independent Risk / Legal
Completed
6/10/2011
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Paragraph 1 - Source of Strength
Paragraph 1 - The board of directors of Citigroup shall
take appropriate steps to fully utilize Citigroup's financial
and managerial resources, pursuant to section 225.4(a)
of Regulation Y of the Board of Governors (12 C.F.R. §
Source of Strength
225.4(a)), to serve as a source of strength to the Bank,
including but not limited to, taking steps to ensure that
the Bank complies with the Consent Order issued by the
OCC regarding the Bank's residential mortgage loan
servicing activities.
The Order
Workplan
1.1
Draft Board Resolution declaring Citigroup's support for Citibank
1.2
Review draft Board Resolution
1.3
Submit to Citigroup Board for approval and adoption
1.4
Obtain Citigroup Board approval of Source of Strength resolution
1.5
Submit resolution of Citigroup Board to the FRB
Submission Ref
Task
Paragraph 2 - Board Oversight
Board Oversight
Plan
Paragraph 2 - Within 60 days of this Order, the board of
directors of Citigroup shall submit to the Reserve Bank a
written plan to strengthen the board's oversight of
Citigroup's enterprise-wide risk management ("ERM"),
internal audit, and compliance programs concerning the
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities conducted through Citi Mortgage or
CitiFinancial. The plan shall, at a minimum, address,
consider, and include: [see paragraph 2, a-d]
The Order
Structure and
Oversight
2.1
Draft Citigroup Board Oversight plan
Independent Risk / Legal
Completed
5/20/2011
2.2
Review Plan and confirm alignment with Consent Order requirements
Independent Risk / Legal
Completed
5/27/2011
2.3
Submit for approval under Deliverable Submission Review Process
Independent Risk / Legal
Completed
6/1/2011
2.4
Submit to Citigroup Board for approval
Legal
Completed
6/6/2011
2.5
Submit Citigroup Board Oversight Plan to the FRB
Legal
Completed
6/13/2011
2.6
Amend charter for Executive Steering Committee
Independent Risk / Legal
Completed
6/30/2011
2.7
Develop framework to assess Citigroup Board committee charters and resolutions against FRB Consent Order requirements
Independent Risk
Completed
5/3/2011
2.8
Identify and inventory existing Citigroup Board committee charters and resolutions with responsibility for risk & governance
functions
Independent Risk
Completed
5/6/2011
2.9
Assess Citigroup Board committee charters and resolutions for gaps against the Consent Order requirements
Independent Risk
Completed
5/6/2011
2.10
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/18/2011
2.11
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2.12
Draft amendments to existing charters and resolutions, or draft new charters and resolutions as needed
Legal
Completed
5/27/2011
2.13
Submit resolutions for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/1/2011
2.14
Submit resolutions to Citigroup Board for approval
Legal
Completed
6/6/2011
2.15
Submit approved resolutions to the FRB
Legal
Completed
6/13/2011
2.16
Establish Citigroup Mortgage Compliance Committee (Citigroup MCC)
Board
Completed
4/11/2011
Compliance
Committee
2.17
Revise Citigroup MCC Board resolution
Board
Completed
5/27/2011
2.18
Create new resolution as required for Citigroup MCC
Board
Completed
5/27/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 2
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
2a.1
Paragraph 2 (a) - Policies to be adopted by the board of
directors that are designed to ensure that the ERM
program provides proper risk management with respect
Risk Management
to CitiMortgage's and CitiFinancial's residential mortgage
and Operational
loan servicing, Loss Mitigation, and foreclosure activities,
Risk Policies
particularly with respect to compliance with Legal
Requirements, and supervisory standards and guidelines
as they develop
The Order
Paragraph 2 (b) - Policies and procedures to ensure that
the ERM program provides proper risk management of
independent contractors, consulting firms, law firms, or
other third parties who are engaged to support
residential mortgage loan servicing, Loss Mitigation, or
foreclosure activities or operations, including their
compliance with the Legal Requirements and Citigroup's
internal policies and procedures, consistent with
supervisory guidance of the Board of Governors
The Order
Workplan
Citi Supplier
Selection and
Management
Policies
Workplan
Paragraph 2 (c) - Steps to ensure that Citigroup's ERM,
audit, and compliance programs have adequate levels
and types of officers and staff dedicated to overseeing
CitiMortgage's and CitiFinancial's residential mortgage
Staffing Adequacy
loan servicing, Loss Mitigation, and foreclosure activities,
as applicable, and that these programs have officers and
staff with the requisite qualifications, skills, and ability to
comply with the requirements of this Order
The Order
Workplan
Task
Develop framework to evaluate risk management policies against Consent Order requirements at Citigroup Board level
As of 7/12/2011
Functional Lead
Status
Due Date
Independent Risk
Completed
5/6/2011
2a.2
Identify and inventory existing risk management policies at Citigroup Board level
Independent Risk
Completed
5/9/2011
2a.3
Assess existing risk management policies against the Consent Order requirements at Citigroup Board level
Independent Risk
Completed
5/13/2011
2a.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2a.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2a.6
Draft amendments to existing risk management policies, or draft new policies as needed
Independent Risk
Completed
6/30/2011
2a.7
Submit for approval under Deliverable Submission Review Process
Independent Risk
In Progress
7/20/2011
2a.8
Submit to the Risk Policy Coordination group
Independent Risk
Not Started
7/19/2011
2a.9
Submit Mortgage Servicing Oversight Policy to the Citigroup Board for approval and adoption
Independent Risk
Not Started
8/9/2011
2a.10
Provide amended and/or new policies to FRB in progress report, if required
Legal
Not Started
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
2b.1
Develop framework to evaluate policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/6/2011
2b.2
Identify and inventory existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/9/2011
2b.3
Assess existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/13/2011
2b.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2b.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2b.6
Draft amendments to existing policies governing Third Party vendors, or draft new policies as needed
Operations & Technology
Completed
6/6/2011
2b.7
Submit amendments for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/6/2011
2b.8
Submit amendments to the Citi Policy Committee for approval, as required
Independent Risk
Completed
6/8/2011
2b.9
Submit amended policy to the Citigroup Board for review
Independent Risk
Completed
6/10/2011
2b.10
Submit relevant policies to the FRB
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
2c.1
Develop framework to evaluate staffing adequacy against Consent Order requirements
Human Resources
Completed
5/16/2011
2c.2
Communicate the Staffing Adequacy Framework to Covered Business Units
Human Resources
Completed
5/16/2011
2c.3
Assess Covered Business Units for gaps using Staffing Adequacy Framework
Human Resources
Completed
6/30/2011
2c.4
Review and discuss identified gaps with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.5
Develop staffing gap remediation with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.6
Develop enhanced staffing plan based on gaps
Human Resources
Completed
6/30/2011
2c.7
Submit staffing plan for approval under Deliverable Submission Review Process
Human Resources
Not Started
7/22/2011
2c.8
Develop staffing adequacy metrics
Human Resources
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 3
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 2 (d) - Steps to improve the information and
reports that will be regularly reviewed by the board of
directors or authorized committee of the board of
dire+A109ctors regarding residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities and
operations, including, compliance risk assessments, and
the status and results of measures taken, or to be taken,
to remediate deficiencies in residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities, and
to comply with this Order
The Order
Workplan
Board Monitoring
MIS and
Remediation
Tracking
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
2d.1
Identify MIS Objectives for Board Mortgage Servicing Information Package, against key areas covered in the Consent Order
requirements
Independent Risk
Completed
5/9/2011
2d.2
Design Board Mortgage Servicing Information Package
Independent Risk
Completed
5/13/2011
2d.3
Review requirements with data producers for metrics feasibility and generation
Independent Risk
Completed
5/20/2011
2d.4
Determine required systems and technology to produce Board Mortgage Servicing Information Package
Technology
Completed
5/20/2011
2d.5
Validate enhanced Board Mortgage Servicing Information Package sample with key users and Executive Sponsor
Independent Risk
Completed
5/27/2011
2d.6
Produce enhanced sample of Board Mortgage Servicing Information Package with metrics
Independent Risk
Completed
6/20/2011
2d.7
Submit Board Mortgage Servicing Information Package for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/27/2011
2d.8
Integrate Citigroup MCC's feedback into the Board Mortgage Servicing Information Package
Independent Risk
Not Started
7/15/2011
2d.9
Include Board Mortgage Servicing Information Package in first Board status report
Independent Risk
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Due Date
Paragraph 3 - Risk Management
Paragraph 3 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its ERM program with respect to its
oversight of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations. The
Risk Management
enhanced program shall be based on an evaluation of
the effectiveness of Citigroup's current ERM program in
the areas of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations, and
recommendations to strengthen the risk management
program in these areas.
The Order
Workplan
Risk Management
Organization
Paragraph 3 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the fundamental elements
of the risk management program and any enhancements
or revisions thereto, including a comprehensive annual
risk assessment, encompass residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities;
The Order
Committee
Structure
Workplan
3.1
Conduct an evaluation of the effectiveness of CitiGroup's current risk management program for Mortgage Servicing Activities
to identify enhancements needed
In Business Risk
Completed
6/10/2011
3.2
Report the recommended enhancements to the Executive Steering Committee (ESC)
In Business Risk
Completed
6/10/2011
3.3
Develop an action plan to enhance risk management for Mortgage Servicing Activities based on the findings of the
effectiveness evaluation
In Business Risk
Completed
6/10/2011
3.4
Verify that ICG has sold (to 3rd party) or transferred to CMI any loans where Citi owns the servicing rights
In Business Risk
Not Started
9/10/2011
3.5
Establish process to ensure that on an ongoing basis any loans that are purchased by ICG where Citi owns the servicing rights
are either sold (to 3rd party) or transferred to CMI within 90 days of purchase
In Business Risk
In Progress
8/3/2011
3.6
Submit the action plan for approval through the Deliverable Submission Review Process
In Business Risk
Completed
6/6/2011
3.7
Submit the action plan to the FRB
Legal
Completed
6/13/2011
3.8
Implement the action plan
Independent Risk
In Progress
8/11/2011
Functional Lead
Status
Due
Independent Risk
Completed
6/6/2011
Submission Ref
Task
3a.1
Appoint a Consumer Mortgage Specialist in Independent Risk
3a.2
Ensure that an In-Business SORM is identified or hired for the U.S. mortgage servicing businesses
Operational Risk
Management
Completed
7/1/2011
3a.3
Ensure Head of Mortgage O&T, CitiMortgage Chief Customer Officer, and CitiMortgage Chief Legal Counsel are identified or
hired
CitiMortgage Risk
Completed
6/10/2011
3a.4
Draft new or enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk
Committees, and the NA Consumer Risk Committee
In Business Risk
Completed
6/17/2011
3a.5
Refine enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk Committees,
and the NA Consumer Risk Committee
In Business Risk
Completed
7/1/2011
3a.6
Submit enhanced ESC mandate and charter to for approval, pursuant to the Deliverable Submission Review Process
CitiMortgage Risk
Not Started
7/15/2011
3a.7
Obtain ESC mandate and charter approval
CitiMortgage Risk
Not Started
8/11/2011
3a.8
Submit enhanced NA Consumer Risk Committee mandate and charter for approval, pursuant to the Deliverable Submission
Review Process
Independent Risk
Not Started
7/15/2011
Independent Risk
Not Started
8/11/2011
In Business Risk
Not Started
7/15/2011
In Business Risk
Not Started
8/11/2011
Functional Lead
Status
Due
3a.9
Obtain NA Consumer Risk Committee mandate and charter approval from Citi CRO
3a.10
Submit enhanced REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters to ESC for approval, pursuant
to the Deliverable Submission Review Process
3a.11
Obtain REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters approval from ESC
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 4
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Staffing Oversight
3a.12
Refine enhancements to staffing adequacy and capacity plan oversight procedures
3a.13
Mortgage
Servicing
Operational
Procedures
Controls, Metrics
and Accountability
Paragraph 3 (a) Continued - The plan shall, at a
minimum, be designed to: (a) Ensure that the
fundamental elements of the risk management program
and any enhancements or revisions thereto, including a
comprehensive annual risk assessment, encompass
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities;
Third Party
Oversight
Change Control
Review and
Approval Process
Comprehensive
Annual Mortgage
Servicing Risk
Assessment
Process
Risk Management
Reports
The Order
Task
As of 7/12/2011
Functional Lead
Status
Due Date
In Business Risk
In Progress
7/31/2011
Create enhanced operational procedures and define new preventive controls for Mortgage Servicing Activities to prevent
service errors
Operations
In Progress
7/15/2011
3a.14
Draft enhancements for default management procedures, including customer communications (e.g., by implementing a single
point of contact), document management, loan modification, foreclosure and bankruptcy processing to improve process and
service quality
Operations
In Progress
7/15/2011
3a.15
Refine enhanced operational procedures
Operations
In Progress
7/31/2011
3a.16
Ensure enhanced operational procedures for key processes are in place
In Business Risk
Not Started
8/11/2011
3a.17
Identify key operational risk breakpoints and metrics
In Business Risk
Completed
7/1/2011
3a.18
Enhance controls for key operational risk or customer service breakpoints
In Business Risk
In Progress
8/11/2011
3a.19
Determine systems and technology enhancements in order to augment the enhanced operational risk controls
In Business Risk
In Progress
8/11/2011
3a.20
Validate QA approach and methodology for key breakpoints
Independent Risk
Not Started
7/15/2011
3a.21
Approve foreclosure law firms management framework, policies, and procedures
In Business Risk
Completed
6/10/2011
3a.22
Approve the third party management framework, policies and procedures
In Business Risk
Completed
6/12/2011
3a.23
Ensure In Business Risk involvement in the change control process (Section 3.3 of the Mortgage Servicing Compliance
Program) for significant process and systems changes
In Business Risk
In Progress
8/11/2011
3a.24
Develop draft methodology for conducting the Comprehensive Annual Mortgage Servicing Risk Assessment ("CAMSRA")
CitiMortgage Risk
Completed
6/2/2011
3a.25
Define role of Independent Risk in CAMSRA
Independent Risk
Completed
6/9/2011
3a.26
Finalize methodology for CAMSRA
CitiMortgage Risk
In Progress
7/25/2011
3a.27
Approve methodology for CAMSRA
In Business Risk
Not Started
8/11/2011
3a.28
Determine required enhancements to risk management reports and MIS for board ("MCC Operational Risk Dashboard"), and
senior management ("Executive Operational Risk Dashboard")
In Business Risk
In Progress
7/31/2011
3a.29
Determine systems and technology enhancements in order to augment the enhanced process and service quality
management reports
In Business Risk /
Technology
In Progress
8/11/2011
3a.30
Ensure risk management dashboards and MIS for board, senior management are in place
In Business Risk
Not Started
8/11/2011
Triggers for Key
Potential
Operating
Breakpoints
3a.31
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3a.32
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3a.33
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 5
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Compliance Risk
Paragraph 3 (b) - The plan shall, at a minimum, be
Management
Programs and
designed to (b) ensure that the risk management
Oversight at Large
program complies with supervisory guidance of the
Banking
Board of Governors, including, but not limited to, the
Organizations with
guidance entitled, "Compliance Risk Management
Complex
Programs and Oversight at Large Banking Organizations
Compliance
with Complex Compliance Profiles," dated October 16,
Profiles
2008 (SR 08-08/CA 08-11); and
(Also MRA 3, 5, 6)
The Order
Paragraph 3 (c) - The plan shall, at a minimum, be
designed to (c) establish limits for compliance, legal, and
reputational risks and provide for regular review of risk
limits by appropriate senior management and the board
of directors or authorized committee of the board of
directors.
The Order
Workplan
Process Risk
Indicators
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
3b.1
Ensure plan is in compliance with the guidance entitled “Rating the Adequacy of Risk Management Processes and Internal
Controls at State Member Banks and Bank Holding Companies” (SR 95-51 (SUP))
In Business Risk
Completed
6/10/2011
3b.2
Conduct an assessment of the ERM plan for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities
against the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with
Complex Compliance Profile," (SR 08-08/CA 08-11)
Independent Risk
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
3c.1
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3c.2
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3c.3
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
3c.4
Enhance reporting formats and reporting procedures to perform periodic reporting of loss norm variances for CMI to senior
management and the Board
Operational Risk
Management
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Paragraph 4 - Compliance Program
Paragraph 4 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its enterprise-wide compliance program
("ECP") with respect to its oversight of residential
mortgage loan servicing, Loss Mitigation, and foreclosure Enhanced ECP
Program
activities and operations. The enhanced program shall
(Also MRA 3, 5, 6)
be based on an evaluation of the effectiveness of
Citigroup's current ECP in the areas of residential
mortgage loan servicing, Loss Mitigation, and foreclosure
activities and operations, and recommendations to
strengthen the ECP in these areas.
The Order
Workplan
4.1
Conduct an assessment of the ECP for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities against
the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with Complex
Compliance Profile," (SR 08-08/CA 08-11)
Compliance
Completed
6/13/2011
4.2
Develop an action plan to enhance the ECP, based on the findings of the effectiveness evaluation
Compliance
Completed
6/13/2011
4.3
Submit for approval under Deliverable Submission review Process
Compliance
Completed
6/13/2011
4.4
Submit the action plan to enhance ECP to the FRB
Legal
Completed
6/13/2011
4.4
Implement the action plan
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 6
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Paragraph 4 (a) - The plan shall, at a minimum, be
designed to: (a) ensure that the fundamental elements of
ECP
the ECP and any enhancements or revisions thereto,
Fundamentals
including a comprehensive annual risk assessment,
(Also MRA 3, 5, 6)
encompass residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities
Submission Ref
Task
Functional Lead
Status
Due Date
4a.1
Develop Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.2
Approve enhanced Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.3
Formalize Governance over Compliance Program
Compliance
In Progress
8/11/2011
4a.4
Enhance comprehensive annual Compliance Risk Assessment for Mortgage Servicing
Compliance
In Progress
7/15/2011
4a.5
Develop Compliance Training Program Standards
Compliance
In Progress
8/11/2011
4a.6
Appoint Mortgage Product Compliance Director
Compliance
Completed
6/1/2011
4a.7
Adopt CER test plan approved by the Director of Mortgage Product Compliance
Compliance
In Progress
8/11/2011
4a.8
Define MIS and management reporting requirements to improve efficiency and effectiveness of Compliance and other control
functions
Compliance / Operations
/ Controls & Emerging
Risk
Completed
6/30/2011
4a.9
Establish ongoing analysis of staff competency and capacity
Compliance
In Progress
8/11/2011
4a.10
Implement Mortgage Servicing Compliance Program
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Compliance
Completed
6/13/2011
Controls & Emerging Risk
/ Compliance
In Progress
8/11/2011
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
The Order
Workplan
Submission Ref
Compliance with
Legal
Requirements and
Supervisory
Guidance
(Also MRA 3, 5, 6)
4b.1
Develop Mortgage Servicing Compliance Program Document
Paragraph 4 (b) - The plan shall, at a minimum, be
designed to: (b) ensure compliance with the Legal
Requirements and supervisory guidance of the Board of
Governors;
4b.3
Enhance Controls & Emerging Risk testing program
4b.4
Adopt enhanced scope and coverage of the regulatory requirements inventory
Workplan
Submission Ref
The Order
Paragraph 4 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that policies, procedures, and
processes are updated on an ongoing basis as
necessary to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors.
The Order
Updated Policies
and Procedures
(Also MRA 3, 5, 6)
Workplan
As of 7/12/2011
Task
Task
4c.1
Implement minimum standards to build a consistent regulatory change management framework across Mortgage Servicing
businesses at an enterprise level
Compliance
In Progress
8/11/2011
4c.2
Formalize existing change management process for regulatory changes, change in policies and procedures and business
process changes
Compliance
In Progress
8/11/2011
4c.3
Incorporate ongoing Legal notification system for regulatory / rules updates for US residential mortgages
Legal
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 7
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 5 - Audit
Paragraph 5 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance the internal audit program with respect
to residential mortgage loan servicing, Loss Mitigation,
and foreclosure activities and operations. The plan shall
be based on an evaluation of the effectiveness of
Citigroup's current internal audit program in the areas of
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities and operations, and shall include
recommendations to strengthen the internal audit
program in these areas.
Audit Plan
Submission
The Order
Workplan
Paragraph 5 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the internal audit program
encompasses residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities;
Scope of Audit
Program
(Also in MRA 1)
The Order
Workplan
Paragraph 5 (b) - The plan shall, at a minimum, be
designed to: (b) periodically review the effectiveness of
the ECP and ERM with respect to residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities,
and compliance with the Legal Requirements and
supervisory guidance of the Board of Governors;
Review
Effectiveness of
ECP and ERM
The Order
Workplan
5.1
Prepare the audit plan
ARR
Completed
6/6/2011
5.2
Submit the audit plan for approval through the Deliverable Submission Review Process
ARR
Completed
6/10/2011
5.3
Submit the audit plan to the FRB
Legal
Completed
6/13/2011
5.4
Implement the audit plan
ARR
In Progress
8/11/2011
Submission Ref
Functional Lead
Status
Due
5a.1
Evaluate the effectiveness of Citigroup's current internal audit program in the areas of Mortgage Servicing Activities and
implement enhancements
Task
ARR
In Progress
8/11/2011
5a.2
Document results of our coverage assessment.
ARR
Completed
6/30/2011
5a.3
Modify the internal audit program for the assessment of mortgage servicing activities, based on the evaluation.
ARR
Completed
6/30/2011
5a.4
Begin execution of revised audit programs across Citi US Mortgage Servicers.
ARR
Completed
6/30/2011
5a.5
Coordinate coverage or establish horizontal reviews across all Citi US Mortgage Servicers.
ARR
In Progress
8/11/2011
5a.6
Develop framework for the periodic evaluation of emerging risks leveraging Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.7
Execute periodic evaluations of emerging risks and determine assessment type; Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.8
Develop audit program for Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.9
Conduct Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.10
Develop audit program for targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.11
Conduct targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.12
Develop data mining and retrievals that provide monitoring capabilities for ARR, CER or Business.
ARR
In Progress
8/11/2011
5a.13
Develop key risk indicators, including customer complaints, vendor performance and other indicators of emerging risks.
ARR
Not Started
8/11/2011
5a.14
Embed the use of data mining/automated testing that enables assessments across entire populations, for assurance reviews
executed under the revised audit program.
ARR
In Progress
7/15/2011
5a.15
Embed data mining and automated testing into new systems and processes; 'design in' versus 'built on' retrievals.
ARR
Not Started
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5b.1
Review and assess existing audit coverage of compliance and risk programs related to Mortgage Servicing Activities to identify
gaps in coverage.
ARR
In Progress
7/13/2011
5b.2
Develop ECP and ERM coverage plan, including scope and frequency of coverage, leveraging horizontal reviews across all
North America residential Real Estate Businesses
ARR
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 8
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 5 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that adequate qualified staffing
of the audit function is provided for residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities;
The Order
Workplan
Adequate
Qualified Staffing
(Also MRA 8)
Workplan
Paragraph 5 (d) - The plan shall, at a minimum, be
designed to: (d) ensure timely resolution of audit findings Timely Resolution
of Audit Findings
and follow-up reviews to ensure completion and
effectiveness of corrective measures;
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
5c.1
Prepare a Mortgage skills assessment across ARR divisions
ARR
Completed
5/31/2011
5c.2
Develop on-going ARR Mortgage training strategy
ARR
Completed
6/30/2011
5c.3
Define ARR Mortgage end-state organization, including headcount, seniority levels, skills, regional alignment and
responsibilities.
ARR
Completed
6/30/2011
5c.4
Create a Mortgage Managing Director position to assess and define globally consistent coverage, including coverage
strategies for Compliance, Risk and vendors and ensure adequacy of staff and training.
ARR
Completed
5/30/2011
5c.5
Assess if adequate resources are in place to support data retrieval initiatives within the Mortgage program.
ARR
Completed
6/30/2011
5c.6
Ensure adequate resources are in place to support data retrieval initiatives within the Mortgage based on assessment results
ARR
Completed
6/30/2011
5c.7
Recruit and hire resources or contract staff required to fulfill the end state organization.
ARR
In Progress
8/11/2011
5c.8
Increase use of guest reviewers for Mortgage reviews.
ARR
Not Started
8/11/2011
5c.9
Enforce completion of a minimum of 48 hours of training by ARR Consumer Staff, including industry specific training covering
Consumer emerging risks and new regulations to ensure that staff are alert to the potential requirements for targeted reviews.
ARR
In Progress
8/11/2011
Task
Submission Ref
Functional Lead
Status
Due
5d.1
Continuously drive completion of corrective action plans for mortgage related issues through the performance of follow up
reviews and escalation of issues.
ARR
In Progress
8/11/2011
5d.2
Ensure on-going escalation to Business Management of past due corrective actions, especially those delayed greater than 60
days through BRCC and AWG forums.
ARR
In Progress
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5e.1
Develop Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011 audit
committee meeting.
ARR
In Progress
7/15/2011
5e.2
Implement Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011
audit committee meeting.
ARR
In Progress
7/31/2011
Functional Lead
Status
Due
The Order
Workplan
Paragraph 5 (e) - The plan shall, at a minimum, be
designed to: (e) ensure that comprehensive
documentation, tracking, and reporting of the status and
resolution of audit findings are submitted to the audit
committee; and
Comprehensive
Documentation
and Tracking
The Order
Workplan
Submission Ref
Escalation
Procedures for
Resolving
Differences of
Opinion
5f.1
Ensure compliance with the current escalation process to ensure proper communication of any differences or exceptions in
issue resolution.
ARR
In Progress
7/31/2011
5f.2
Formalize the audit issue escalation process as warranted.
ARR
In Progress
7/31/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Paragraph 5 (f) - The plan shall, at a minimum, be
designed to: (f) establish escalation procedures for
resolving any differences of opinion between audit staff
and management concerning audit exceptions and
recommendations, with any disputes to be resolved by
the audit committee.
The Order
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 9
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 6 - CitiFinancial Activities
Plan for
Strengthening
Coordination of
Loss Mitigation
Communication
with Borrowers
Review for
Impediments to
Loss Mitigation
Process
Paragraph 6 - Within 60 days of this Order, CitiFinancial
shall submit to the Reserve Bank an acceptable written
plan for strengthening coordination of communications
with borrowers, both oral and written, related to Loss
Mitigation and foreclosure activities to ensure that
CFNA Employee
communications are timely and effective, are designed to Incentives Review
avoid confusion to borrowers, to ensure continuity in the
handling of borrowers' loan files during the Loss
Mitigation and foreclosure processes by personnel
knowledgeable about the borrower's situation, and to
ensure that decisions concerning Loss Mitigation options
or programs continue to be made and communicated in
a timely fashion. Prior to submitting the plan,
CitiFinancial shall conduct a review to determine (i)
whether processes involving past due mortgage loans or
OCC IX a
foreclosures overlap in such a way that they may impair
OCC IX h
or impede a borrower's efforts to effectively pursue a
Loss Mitigation option or program, and (ii) whether
employee incentive compensation practices discourage
Loss Mitigation. The plan shall provide for at least the
same level of coordination of communications with
borrowers as the level that the Bank and CitiMortgage
are required to maintain in their Consent Order with the
OCC.
OCC IX b
The Order
Workplan
6.1
Develop a plan for strengthening coordination of Loss Mitigation communication with borrowers, as required
CFNA
Completed
5/10/2011
6.2
Submit plan for approval under Deliverable Submission Review Process
CFNA
Completed
6/6/2011
6.3
Submit plan to the FRB
Legal
Completed
6/13/2011
6.4
Implement plan for strengthening coordination of Loss Mitigation communication with borrowers
CFNA
In Progress
8/11/2011
6.5
Review CitiFinancial's relevant policy and procedures, branch training materials, standard customer letters and billing
statements, as well as interviews with key business managers for impediments to Loss Mitigation process
CFNA
Completed
5/5/2011
6.6
Review current incentive compensation practices to determine if they in any way discourage loss mitigation
CFNA
Completed
5/5/2011
6.7
Report results of the review to senior managers and obtain their concurrence on current compensation practices
CFNA
Completed
5/5/2011
6.8
Assess and review current policies and procedures as they relate to OCC IX
CFNA
Completed
5/5/2011
6.9
Augment policies and procedures to direct branch managers to place a hold on any account where a borrower is actively
pursuing loss mitigation with CitiFinancial
CFNA
Completed
7/25/2011
6.10
Augment policies and procedures to direct branch managers to place a hold on a borrowers account until any complaint
covering denial of a loss mitigation request is addressed
CFNA
Completed
7/25/2011
6.11
Implement quality control testing to ensure that branch managers appropriately place holds on accounts to prevent them from
transferring to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.12
Implement for existing branch audits, a review of whether branch managers appropriately place holds on accounts to prevent
servicing transfer to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.13
Develop a plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
7/15/2011
6.14
Implement the plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
8/1/2011
6.15
CitiFinancial will augment its policies and procedures to require formally that Branch Managers communicate all final Loss
Mitigation decisions to borrowers orally within 10 days of such decision.
CFNA
Completed
7/25/2011
6.16
Augment policy and procedures requiring branch managers to send any borrower who requests loss mitigation, a letter within
48 hours explaining required documentation and notifying borrower of the 30 day deadline for submitting required
documentation
CFNA
Completed
7/25/2011
6.17
CitiFinancial will improve these policies and procedures to require Branch Managers to send borrowers who are denied second
mortgage modifications a written notice of adverse action within 48 hours of the decision.
CFNA
Completed
8/1/2011
6.18
CitiFinancial will implement quality control testing to ensure that Branch Managers send borrowers timely letters explaining
Loss Mitigation documentation requirements, timelines, and decisions.
CFNA
In Progress
8/1/2011
6.19
Implement additional branch audit processes to determine if branches send borrowers timely letters explaining loss mitigation
documentation requirements, timelines and decisions
CFNA
In Progress
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 10
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 6 (Continued) - Within 60 days of this Order,
CitiFinancial shall submit to the Reserve Bank an
acceptable written plan for strengthening coordination of
communications with borrowers, both oral and written,
related to Loss Mitigation and foreclosure activities to
ensure that communications are timely and effective, are
designed to avoid confusion to borrowers, to ensure
continuity in the handling of borrowers' loan files during
the Loss Mitigation and foreclosure processes by
personnel knowledgeable about the borrower's situation,
and to ensure that decisions concerning Loss Mitigation
options or programs continue to be made and
communicated in a timely fashion. Prior to submitting
the plan, CitiFinancial shall conduct a review to
determine (i) whether processes involving past due
mortgage loans or foreclosures overlap in such a way
that they may impair or impede a borrower's efforts to
effectively pursue a Loss Mitigation option or program,
and (ii) whether employee incentive compensation
practices discourage Loss Mitigation. The plan shall
provide for at least the same level of coordination of
communications with borrowers as the level that the
Bank and CitiMortgage are required to maintain in their
Consent Order with the OCC.
Workplan
OCC IX c
OCCIX d
OCC IX e
OCC IX l
Submission Ref
Functional Lead
Status
Due Date
6.20
Implement additional branch audit processes to determine if branches appropriately direct borrowers whose servicing was
transferred to CitiMortgage Default Servicing
CFNA
In Progress
8/1/2011
6.21
Develop customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
7/25/2011
6.22
CitiFinancial will augment its policies and procedures to require that, when a borrower calls a CitiFinancial branch after the
servicing of the account has been transferred to CitiMortgage, the CitiFinancial branch manager will contact CitiMortgage with
the borrower on the line, subject to the borrower's permission, to transfer the call to CitiMortgage Default Servicing.
CFNA
Completed
8/1/2011
6.23
Implement customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
8/1/2011
6.24
Enhance policies and procedures to identify the Branch Manager of each CitiFinancial branch as the single point of contact for
borrowers whose accounts are serviced by that branch and who request loss mitigation.
CFNA
Completed
8/1/2011
6.25
Written communications with borrowers who request Loss Mitigation will contain the name and contact information of their
Branch Manager, along with information for borrowers to contact other CitiFinancial branch employees in the event the Branch
Manager is unavailable.
CFNA
Completed
8/1/2011
6.26
Update systematic HUD homeownership counseling letter sent to borrowers at 40 days delinquent to include loss mitigation
options which explains to customers that modification options are available to borrowers
CFNA
Completed
7/30/2011
6.27
Reclassify training programs regarding mortgage delinquencies, loss mitigation, and loan modification from "suggested' to
"required" for all employees
CFNA
Completed
7/1/2011
6.28
Implement quality control testing to ensure branch managers appropriately send borrowers adverse action letters containing
reasons for the denial of the borrowers loan modification request
CFNA
In Progress
8/1/2011
6.29
Implement additional branch audit processes to determine if branch manager appropriately send borrowers adverse action
letters containing reason for denial
CFNA
In Progress
8/1/2011
6.30
Inclusion of local branch manager contact information on adverse action letters sent to borrowers denied loan modifications
CFNA
Completed
7/25/2011
OCC IX i
6.31
Inclusion of a toll free customer complaint hotline on the CitiFinancial self service website will facilitate borrowers calling to file
or escalate borrower complaints regarding loss mitigation, loan modification or foreclosure activities
CFNA
Completed
8/1/2011
OCC IX j
6.32
Monitor customer complaints concerning loss mitigation and establish a key risk indicator that will trigger targeted reviews to
branches
CFNA
Completed
8/1/2011
6.33
Ensure CitiFinancial has quality control testing to ensure that payments made to branches are appropriately posted and any
misapplication of funds is corrected in an appropriate and timely manner.
CFNA
Completed
6/30/2011
6.34
Implement quality control testing to ensure that branch managers appropriately track and maintain borrower loan files, and that
branch managers timely notify borrowers of missing documents
CFNA
Completed
8/1/2011
6.35
Implement additional branch audit processes to determine if branch employees appropriately track and maintain borrower loan
files, and that branch employees timely notify borrowers of missing documents
CFNA
In Progress
8/1/2011
OCC IX n
6.36
Augment or draft new policy to ensure that all junior liens owned by CitiFinancial are taken into consideration when analysis of
a loan modification begins on a CitiFinancial first mortgage
CFNA
Completed
8/1/2011
Workplan
Submission Ref
Task
Functional Lead
Status
Due
OCC IX f
OCC IX g
OCC IX k
OCC IX m
The Order
Task
As of 7/12/2011
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 11
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
7.1
Updated policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities only
7.2
Submit policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities
As of 7/12/2011
Functional Lead
Status
Due Date
Compliance
Completed
5/27/2011
CFNA
Completed
5/27/2011
Paragraph 7 - CitiFinancial Activities
Execute New SLA
Between
CitiFinancial and
Paragraph 7 - Within 45 days of this Order, CitiFinancial
CMI
shall submit to the Reserve Bank acceptable policies and
Establish
procedures for the oversight of foreclosure activities
Oversight
performed by CitiMortgage on behalf of CitiFinancial.
Committee
The policies and procedures shall, at a minimum, provide
for appropriate oversight of CitiMortgage's foreclosure
activities with respect to residential mortgage loans
otherwise serviced by CitiFinancial to ensure that
CitiMortgage complies with the Legal Requirements.
The Order
7.3
Draft Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/15/2011
7.4
Execute Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/31/2011
7.5
Establish Oversight Committee
CFNA
Completed
6/30/2011
7.6
Create template for reporting material concerns
CFNA
In Progress
7/31/2011
7.7
Obtain CMI Scorecards (Law Firms and Third Party Vendors)
CFNA
Completed
6/30/2011
Hire Oversight
Relationship
Manager
7.8
Create job description for Oversight Relationship Manager (RM)
CFNA
Completed
5/27/2011
7.9
Hire RM or designate interim RM
CFNA
Completed
6/9/2011
Schedule
Oversight
Committee
Meetings
7.10
Schedule quarterly internal meetings
CFNA
Completed
6/9/2011
7.11
Schedule quarterly meetings with CMI
CFNA
In Progress
7/31/2011
7.12
Schedule twice-yearly on-site reviews of CMI
Workplan
Submission Ref
Enhanced ERM
Program
8b.1
Adopt and implement the plan approved by the FRB to enhance the enterprise-wide risk management (ERM) program for the
U.S. Residential Mortgage Servicers
Enhanced ECP
Program
8b.2
Adopt and implement the plan approved by the FRB to enhance the ECP program
8b.3
Adopt and implement the plan approved by the FRB to enhance the Internal Audit program
8b.4
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
8b.5
Workplan
Submission Ref
Develop
Processes for
Remote Reviews
of CMI
CFNA
In Progress
7/31/2011
Functional Lead
Status
Due
In Business Risk
Not Started
Within 10 Days of FRB
Approval
Compliance
Not Started
Within 10 Days of FRB
Approval
ARR
Not Started
Within 10 Days of FRB
Approval
Adopt and implement written plan, approved by the FRB, for strengthening communication with borrowers
CFNA
Not Started
Within 10 Days of FRB
Approval
Adopt and implement policies and procedures, approved by the FRB, in accordance with the CFNA oversight plan
CFNA
Not Started
Within 10 Days of FRB
Approval
Task
Paragraph 8 - Approval, Implementation, and
Progress Reports
Paragraph 8b - Within 10 days of approval by the
Reserve Bank, Citigroup and CitiFinancial, as applicable, Enhanced Internal
Audit Program
shall adopt the approved plans, policies, and
procedures. Upon adoption, Citigroup and CitiFinancial,
Enhanced
as applicable, shall implement the approved plans,
Borrower
policies, and procedures, and thereafter fully comply with
Communication
them.
Plan
The Order
Paragraph 8c - During the term of this Order, the
approved plans, policies, and procedures shall not be
amended or rescinded without the prior written approval
of the Reserve Bank.
The Order
Amendment
Requests
Workplan
Functional Lead
Status
Due
8c.1
Draft proposed changes to approved plans, policies, and procedures, as necessary
Legal
Not Started
Ongoing
8c.2
Submit proposed changes to approved plans, policies, and procedures for approval under the Deliverable Submission Review
Process, as necessary
Legal
Not Started
Ongoing
8c.3
Request written approval for proposed changes to approved plans, policies, and procedures from the FRB, as necessary
Legal
Not Started
Ongoing
Functional Lead
Status
Due
Submission Ref
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 12
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 8d - During the term of this Order, Citigroup
and CitiFinancial, as applicable, shall revise the
approved plans, policies, and procedures as necessary
to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors. The revised plans, policies, and procedures
shall be submitted to the Reserve Bank for approval at
the same time as the progress reports described in
paragraph 9 of this Order.
The Order
Workplan
Revision to the
Approved Plans,
Policies, and
Procedures
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Operations
Not Started
Ongoing
8d.1
Obtain revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance from
repository, as necessary (Citigroup and CFNA)
8d.2
Submit revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to Boards,
as necessary (Citigroup and CFNA)
Legal
Not Started
Ongoing
8d.3
Attach revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to progress
reports for submission to the FRB, as necessary (Citigroup and CFNA)
Legal
Not Started
With progress reports
Submission Ref
Task
Functional Lead
Status
Due
6/10/2011
Paragraph 9 - Approval, Implementation, and
Progress Reports
Paragraph 9 -Within 30 days after the end of each
Compliance
Committee
calendar quarter following the date of this Order,
Progress Reports
Citigroup's and CitiFinancial's boards of directors, or
authorized committee of the boards of directors, shall
jointly submit to the Reserve Bank written progress
reports detailing the form and manner of all actions taken
to secure compliance with the provisions of this Order
and the results thereof.
Monitoring
Implementation
The Order
Workplan
9.1
Evaluate Compliance Committee Progress Report requirements as per the Consent Order
Independent Risk / PMO
Completed
9.2
Design template for written Progress Report as per Consent Order requirements
PMO
Completed
6/20/2011
9.3
Validate Progress Report template with key stakeholders
PMO
Completed
6/25/2011
9.4
Produce Initial Progress Report
PMO
Completed
7/10/2011
9.5
Submit Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
7/15/2011
9.6
Submit Progress Report to Citigroup Board for review and approval
PMO
Not Started
7/20/2011
9.7
Submit first quarterly Progress Report to FRB
Board / Legal / MCC
Not Started
8/1/2011
9.8
Produce second quarterly Progress Report
PMO
Not Started
10/10/2011
9.9
Submit second quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
10/15/2011
9.10
Submit second quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
10/20/2011
9.11
Submit second quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
10/31/2011
9.12
Produce third quarterly Progress Report
PMO
Not Started
1/10/2012
9.13
Submit third quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
1/15/2012
9.14
Submit third quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
1/20/2012
9.15
Submit third quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
1/30/2012
9.16
Produce future Progress Reports for FRB submission quarterly, as required
PMO
Not Started
As Required
9.17
Submit future quarterly Progress Reports for approval under Deliverable Submission Review Process
PMO
Not Started
As Required
9.18
Submit future Progress Reports to Citigroup Board
Board / Legal / MCC
Not Started
As Required
9.19
Submit future Progress Reports to the FRB
Board / Legal / MCC
Not Started
As Required
9.20
Develop status reporting after 60 day submission
PMO
Completed
6/15/2011
9.21
Develop Board status reporting calendar
PMO
Completed
7/1/2011
9.22
Submit Board status report to the MCC for review
PMO
Completed
7/5/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 13
Appendix 4 –
Glossary
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Glossary of Terms
2MP
Second Lien Modification Program
ARR
Audit and Risk Review
Bank
Citibank, N.A.
BISO
Business Information Security Officer
BP&A
Business Planning & Analysis
BRCC
Business Risk Compliance and Control Committee
BSA
Branch Self-Assessment (CitiFinancial)
CAMBRS
Citi Anti-Money Laundering Business Rule Standards
CAP
Corrective Actions Plan
CARA
Compliance Annual Risk Assessment
CARE
Customer Account, Research, and Escalation Unit (CitiFinancial)
CASP
Citi Approved Supplier Program
CBNA
Citibank, N.A.
CER
Control and Emerging Risk
CIP
Compliance Implementation Plan
CISS
Citi Information Security Standards
Citi
Citigroup, Inc. and its subsidiaries
Citibank
Citibank, N.A.
Citigroup
Citigroup, Inc.
CitiFinancial
CitiFinancial Credit Corporation
CitiMortgage
CitiMortgage, Inc.
CMAC
Capital Markets Product Approval Committee
CMR
Center Manager Review (CitiFinancial)
Consent Orders
The FRB Order and the OCC Order, collectively
Covered Business Unit
For purposes of this document, Mortgage Servicing operations,
including collections, loss mitigation, foreclosure operations,
Independent Risk, In-business Risk, CER, and Compliance
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
CPAC
Consumer Product Approval Committee
CPB
Citibank Private Bank
CRMS
Corporate Resolution Management System (MERS)
CSA
Center Self-Assessment (CitiFinancial)
CSS
Citi Shared Services
CSSMP
Citi Supplier Selection and Management Policy
CTU
Central Testing Unit
Deliverable Submission
Review Process (DSRP)
Deliverables requiring approval prior to going to the MCC go
through the tollgate process (as necessary), the IC, the ESC, and
the SEOC (as necessary)
DERU
Default Executive Response Unit
DMR
District Manager Review (CitiFinancial)
DRI
Document Retrieval System (CitiMortgage)
ECP
Enterprise-Wide Compliance Program
ERM
Enterprise-Wide Risk Management
ERU
Executive Response Unit
FTE
Full time equivalent
FRB
Board of Governors of the Federal Reserve System
FRB Order
The Consent Order issued on April 13, 2011, by the Board of
Governors of the Federal Reserve System in the matter of
Citigroup Inc. and CitiFinancial Credit Company
FRB SR 08-8
The Reserve Bank Supervision and Regulation Letter titled
“Compliance Risk Management Programs and Oversight at Large
Banking Organizations with Complex Compliance Profiles”
GLMS
Global Learning Management System
GSE
Government Sponsored Enterprise
GSM
Global Securitized Markets
HAMP
Home Affordable Modification Program
HR
Human Resources
iCAPS
Citi’s centralized issue and tracking system
ICG
Institutional Clients Group
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
KRI
Key Risk Indicator
Legal Requirements
All applicable state and federal laws (including the U.S.
Bankruptcy Code and the SCRA), rules, regulations, and court
orders, as well as MERS Membership Rules, servicing guides with
GSE or investors, and other contractual obligations, including
those with the Federal Housing Administration and those required
by HAMP, and loss share agreements with the Federal Deposit
Insurance Corporation
LMS
Learning Management System (CitiFinancial)
Loss Mitigation
Activities related to special forbearances, repayment plans,
modifications, short refinances, short sales, cash-for-keys and
deeds-in-lieu of foreclosure that involve non-performing
residential mortgage loans
MAC
Modification Assessment Control
MCC
Mortgage Compliance Committee
MCS
Most Critical Supplier
MERS
MERSCORP, Inc. and MERS, Inc., collectively
MERS Requirements
MERS membership rules, terms, and conditions
MIS
Management Information Systems
Mortgage Servicing
Activities
The U.S. residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities that are the subject of the Consent Orders
MPC Director
Director of Mortgage Product Compliance
MSD
CitiMortgage Master Servicing Department
NTC
Nationwide Title Clearing
O&T
Operations & Technology
OCC
Office of the Comptroller of the Currency
OCC Order
The Consent Order, issued on April 13, 2011, by the OCC, in the
matter of Citibank, N.A.
OLM
Online Manual
ORM
Operational Risk Management
OSP
Outsource Service Provider
PMO
Project Management Office
QA
Quality Assurance
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FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
QC
Quality Control
RCSA
Risk Control Self Assessment
REL
Real Estate Lending
REOSC
Real Estate Operations Steering Committee
RESC
Real Estate Steering Committee
Reserve Bank
Federal Reserve Bank of New York
Risk Management &
Control Programs
Citi’s enterprise-wide risk management, compliance, and internal
audit programs, collectively
RMFC
Risk Management and Finance Committee
RRI
Regulatory Requirements Inventory
RRM
Regulatory Risk Matrix
SCC
Servicing Compliance Committee
SCM
Strategic Cost Management
SCRA
Servicemembers Civil Relief Act
Servicers
Third parties who own servicing rights
SLA
Service-Level Agreement
SME
Compliance Subject Matter Expert
SORM
Senior Operational Risk Manager
SPOC
Single Point of Contact
TPISA
Third Party Information Security Assessment
U.S. Residential Mortgage All Citi businesses that service U.S. residential mortgage loans
Servicers
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Appendix 2 –
Narratives
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Paragraph 4 – Enterprise-wide Compliance Program1
(4) Within 60 days of this Order, Citigroup shall submit to the Reserve Bank an acceptable
written plan to enhance its enterprise-wide compliance program (“ECP”) with respect to
its oversight of residential mortgage loan servicing, loss mitigation, and foreclosure
activities and operations. The enhanced program shall be based on an evaluation of the
effectiveness of Citigroup’s current ECP in the areas of residential mortgage loan
servicing, loss mitigation, and foreclosure activities and operations, and recommendations
to strengthen the ECP in these areas.
Pursuant to Paragraphs 3 and 4 of the FRB Order, Citi conducted an evaluation of the
effectiveness of its current ECP with respect to Mortgage Servicing Activities conducted by
Citi’s U.S. Residential Mortgage Servicers. Citi’s evaluation was designed to assess the scope
and elements of the current ECP related to those activities to evaluate the current ECP in light of
the requirements of Paragraph 4; and to determine, based on that assessment and evaluation,
areas in which Citi could enhance its ECP. In performing its evaluation, Citi used the guidance
in Reserve Bank Supervision and Regulation Letter 08-8 (“FRB SR 08-8”), titled “Compliance
Risk Management Programs and Oversight at Large Banking Organizations with Complex
Compliance Profiles,” as a guide. Citi also referred to the findings from the horizontal
foreclosure practices examination completed in the fourth quarter of 2010.
Based on this evaluation, which was conducted across Citi’s U.S. Residential Mortgage
Servicers, Citi developed its plan to enhance the ECP. A summary of the plan is contained
below. In addition, the Citi Mortgage Servicing Compliance Program (the “Mortgage Servicing
Compliance Program”), which is incorporated herein by reference and attached as Exhibit 1
hereto, sets forth the structure, roles and responsibilities, and activities for Citi’s ECP related to
Mortgage Servicing Activities. The Mortgage Servicing Compliance Program is designed in
accordance with the requirements set forth in Section 2.2.1 of Citi’s Global Compliance Control
Policy.
1
This program is accompanied by a cover letter that provides an overview of Citigroup’s response to the FRB Order
and that includes a glossary of terms and acronyms used but not defined herein.
We respectfully request, pursuant to 5 U.S.C. § 552(b) and 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8), that
confidential treatment be accorded this enclosure, and the confidential and privileged business, commercial, and
financial information it contains, as well as any transcripts, notes, memoranda, or other records created by, or at the
direction of, the Federal Reserve Bank of New York, its officers, or staff that reflect or relate to this confidential
information. We also respectfully request that you promptly inform us of any request under the Freedom of
Information Act seeking access to any of the information enclosed herewith, to permit us to substantiate the grounds
for confidential treatment.
We further note that this enclosure is protected by legal privileges, including but not limited to the attorney-client
and work product privileges. In accordance with 12 U.S.C. § 1828(x), we do not waive, and expressly preserve, all
such privileges and protections.
CONFIDENTIAL
The plan shall, at a minimum, be designed to:
(a)
Ensure that the fundamental elements of the ECP and any enhancements or
revisions thereto, including a comprehensive annual risk assessment, encompasses
residential mortgage loan servicing, loss mitigation, and foreclosure activities;
Citi will continue to rely on its “Three Lines of Defense” compliance risk management
framework to achieve compliance with the Legal Requirements and supervisory guidance as
defined in the FRB Order. The Business, as the first line of defense, will enhance and implement
policies, procedures, and controls. Compliance, together with other Independent Control
functions forming the second line of defense, will monitor the control environment and utilize
CER to conduct independent testing as needed. ARR will be the third line of defense by
validating action plan tasks and executing ARR programs for business activities, as well as for
the design and operating effectiveness of the overall ECP, as described in this submission. This
framework provides the foundation for Citi’s Mortgage Servicing Compliance Program.
Enhance ECP governance and integrate compliance program oversight and standards.
Management is taking a number of steps that will improve Citi’s ability to maintain a
broad-scope, consistent Compliance program across U.S. Residential Mortgage Servicers,
as follows:
x
Citi has created and will fully implement within 120 days of the FRB Order a
formal, franchise-wide Citi Mortgage Servicing Compliance Program that
documents, in detail, the fundamental elements and activities, applicable
guidance and minimum standards, governance, and roles and responsibilities
that will apply across Mortgage Servicing Activities;
x
The Citi Mortgage Servicing Compliance Program provides that the REOSC
will review Mortgage Servicing Activities and compliance performance on an
enterprise-wide basis, and describes fundamental compliance roles and
responsibilities across business and control groups; and
x
The Head of Compliance for Consumer North America Real Estate Lending
has been appointed Mortgage Product Compliance Director (“MPC
Director”), with responsibility for Compliance activities and standards across
all U.S. Residential Mortgage Servicers. This additional responsibility will be
reflected in changes to staffing, as further discussed below. Similar changes
are being implemented in the CER organization, which will expand and
standardize its testing program across Mortgage Servicing Activities.
Enhance the comprehensive risk assessment process for Mortgage Servicing Activities.
The Compliance Annual Risk Assessment (“CARA”) process was constructed to be
country- or business unit-specific, and to roll up to the corporate level those risks material
to Citi and CBNA. Citi’s 2010 CARAs of CitiMortgage and CitiFinancial, while distinct
by business unit, followed a consistent approach and included key compliance risks by
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CONFIDENTIAL
business line. The assessments reflected current and potential compliance risks,
identified through analysis of consistent quantitative and qualitative data items, derived
from a number of compliance risk drivers.
In order both to produce the desired Citi-wide view and leverage this work to produce an
initial “base line” assessment to support future prioritization of risks and associated
program enhancements, Compliance designed a comprehensive risk assessment of the
ECP associated with Mortgage Servicing Activities, drawing upon the efforts of a multidisciplinary group of Compliance, Independent Risk, In-business Risk, and Business
product specialists, that covered the following areas:
x
Evaluation of inherent and residual risks associated with mortgage products;
x
Linkage to key rules and regulations, with the ability to update to reflect new
or additional regulations and their impact; and
x
Flexibility to include additional, specific mortgage-related business metrics.
A “top-down” analysis of compliance risks associated with Mortgage Servicing Activities
is underway, which will be informed by more granular “bottom-up” input of mortgage
compliance and business professionals.
As a result, we anticipate that a comprehensive compliance risk assessment for Mortgage
Servicing Activities, with an enhanced product view across Citi entities and addition of
mortgage business metrics, will be available in July 2011. This work product will
provide a foundation both for developmental work in connection with the FRB Order and
for a more streamlined, integrated, and sustainable CARA for Mortgage Servicing
Activities in the future. The enhanced ECP described above will additionally support a
more integrated approach to both the compliance risk assessment process and the use of
its output.
Enhance the scope and application of third party oversight controls.
The enhanced Mortgage Servicing Compliance Program will reinforce, on an enterprise
wide-basis, the requirements that all third party relationships involved in Mortgage
Servicing Activities, including servicers, be covered by Citi’s standards. To support this
mandate, Citi will enhance the inventory of applicable laws and regulations, policies and
procedures, monitoring, testing, training, risk assessments, MIS, and reporting, as
required by the Mortgage Servicing Compliance Program. Specific actions that have
been completed to date, or are planned for the near future, include the development by
CitiFinancial of a policy and procedures for the oversight of Mortgage Servicing
Activities conducted by CitiMortgage on CitiFinancial’s behalf. In addition, specific
Mortgage Servicing Compliance Program attributes and coverage are being put in place
for third party law firms acting on behalf of Citi, to include expansion of the inventory
and analysis of applicable state and other requirements, as well as enhanced document
management, oversight, monitoring, testing, onboarding, and specific fitness
-3-
CONFIDENTIAL
requirements. Similarly, overall enhancements will be put in place to govern the
MERSCORP relationship.
More generally, Citi is in the process of introducing expanded monitoring and service
level performance indicators for third parties, to include routine visits and regularly
scheduled due diligence, scorecards, and relative performance comparisons.
Enhance the scope and coverage of the Regulatory Requirements Inventory (“RRI”).
Citi is enhancing the level of detail in its RRI. Compliance and Legal have both
historically participated in a process to maintain the RRI. Given the criticality of the RRI
to the Mortgage Servicing Compliance Program, Citi recently requested that outside
counsel examine the existing RRI and update, complete, or expand it as necessary. As a
result, outside counsel advised Citi to enhance the RRI by providing detail on each
actionable requirement within a regulation, further expanding upon regulatory guidance,
and breaking out specific state law requirements that apply to Mortgage Servicing
Activities. The RRI will also be enhanced with respect to federal regulatory guidance
and GSE investor requirements that apply to Mortgage Servicing Activities.
As further discussed in the response to paragraph (c) below, Citi will also enhance its
regulatory change management process to keep the newly enhanced RRI current, utilizing
a number of reputable sources to receive timely, ongoing updates on changes to laws and
regulations.
Enhance policies and procedures to reflect the appropriate program scope, the expansion of the
RRI described above, and the MIS and reporting obligations needed to support enhancements of
the governance structure.
Mortgage Servicing Activities policies and procedures will be enhanced based on the
expanded RRI, changes in business processes, and the implementation of new or
enhanced controls. In addition, protocols and assessment work will be added as
appropriate to drive consistency in certain policies and procedures across business units
and entities, and enhanced change management methodologies, as described below, will
be cascaded to all policy and procedure owners.
Citi is also enhancing policies and procedures to provide a greater level of detail at a stepby-step level for users of systems and processes. Actions to implement these
enhancements include:
x
Line management and operations are creating an inventory of existing policies
and procedures as a first step towards creation of a complete, updated, and
sustainable body of policies and procedures that will be documented using a
consistent template, stored centrally, and published to employees;
x
Policies and procedures are being reviewed to cover the following:
1.
To the Consent Orders, to ensure responsiveness;
-4-
CONFIDENTIAL
2.
3.
x
To the newly enhanced and validated RRI to ensure coverage; and
Against end-to-end process flows to confirm that processes are
documented with sufficient specificity to provide clear direction to
employees and agents, and to permit the identification of those
points at which there should be a control or KRI associated with
the process; and
Enhanced policies and procedures have been created for MERSCORP
oversight and are being created for bankruptcy and foreclosure processes, and
to support the enhanced Mortgage Servicing Activities, including “single
point of contact” and Loss Mitigation processes that Citi is adopting,
consistent with the Consent Orders.
The enhanced policies and procedures will drive training, control, monitoring, and testing
development, consistent with the Mortgage Servicing Compliance Program.
Training.
Staff supporting Citi’s U.S. Residential Mortgage Servicers currently participate in a
range of training programs, driven variously at the Citi level, by the business unit, and by
Compliance. The current training curriculum and schedule will be enhanced through the
use of needs assessments processes, expansion to include additional compliance-related
components of the Default Servicing process, formalized annual planning, and more
consistency with respect to training frequency and audience across Mortgage Servicing
Activities. In addition, training will be provided as appropriate around new and enhanced
processes, policies and procedures, and as a result of the Staffing Adequacy Framework
(see section 8 below).
MIS and Management Reporting.
During the 2nd quarter of 2011, Citi developed a plan for enhancing its MIS for
Mortgage Servicing Activities (“MIS Plan”). Key compliance-related information being
developed includes the following:
x
Compliance and overall risk assessment information including ratings and
control remediation plans;
x
Complaint volumes, trends, and resolution time vs. established standards;
x
Staffing levels;
x
Compliance monitoring and testing results, including aged issues and related
action plans;
x
Results of third party oversight reviews; and
x
Trends in compliance risk assessment information obtained through the
CARA process.
-5-
CONFIDENTIAL
The planned management reporting will enhance the efficiency and effectiveness of
Compliance and other control functions, as well as drive a more integrated control
environment.
Staffing Adequacy Framework.
As noted in the Cover Letter, control groups including Compliance are conducting formal
assessments of staffing capacity and competency to determine whether human resources
should be enhanced to meet Citi’s commitments under the Consent Orders.
Compliance worked with Citi HR to complete its assessment.
However, as a result of the assessment,
Compliance created 17 new positions, resulting in a 15% staffing increase across bank
and non-bank units supporting Mortgage Servicing Activities. Significantly, 15 of the
new positions were created in the Real Estate Lending Compliance unit to directly
support the MPC Director and the new enterprise-wide Mortgage Servicing Compliance
Program, resulting in a 57% increase in that unit. Compliance anticipates that additional
headcount will be added to the CER unit, as well, to support compliance testing.
Recruiting and hiring for these positions is well underway, with candidates either hired or
pending hire for more than 50% of the new roles.
(b)
Ensure compliance with the legal requirements and supervisory guidance of
the Board of Governors;
The ECP enhancements described above, and further detailed in the Mortgage Servicing
Compliance Program attached as Exhibit 1, have been designed to meet all legal and supervisory
guidance requirements, including those laid out in FRB SR 08-8. Ongoing confirmation of the
quality and consistency of execution, as well as the sustainability of the Mortgage Servicing
Compliance Program, will be provided through an integrated program of in-business and
independent monitoring and testing, together with a robust mechanism for reporting results and
flagging KRIs for management and oversight committees.
Monitoring and testing is part of Citi’s “Three Lines of Defense” framework. This section
focuses on the First and Second Lines, as ARR (the Third Line) is covered separately. Citi plans
to enhance monitoring and testing according to the following general principles:
x
Adopting a more granular approach to risk assessment, including RRI,
validation of the related controls, adjustment of monitoring and testing scope
and techniques, as well as consideration for Mortgage Servicing Activities
across multiple lending businesses, third party vendors, MERSCORP, and law
firms;
x
Enhancing the control assessment process in the Business, including O&T, to
establish Key Operating Risks and associated KRIs, as well as enhanced QA
programs related to Loss Mitigation, foreclosure, and bankruptcy activities;
and
-6-
CONFIDENTIAL
x
Augmenting traditional sampling-based testing with additional alternative
testing methodologies, as applicable.
In addition, Citi will take the following steps:
x
The compliance risk assessment will be enhanced to consider Mortgage
Servicing Activities across all U.S. Residential Mortgage Servicers, and, as a
result, a holistic monitoring and testing program for Mortgage Servicing
Activities will be executed across all U.S. Residential Mortgage Servicers;
x
Confirm applicability of each regulatory requirement to individual businesses,
the related controls, and the appropriate level of monitoring and testing. This
review will result in updates to the monitoring and testing programs. The
primary focus of this review will be on the key default servicing related
regulatory topics, such as Equal Credit Opportunity Act (ECOA),
ServiceMembers Civil Relief Act (SCRA), Foreclosure, Loss Mitigation,
Federal Housing Authority (FHA) Loss Mitigation, Rural Development Home
Affordability Modification Program (RD/HAMP), Bankruptcy, and Fair Debt
Collection Practices Act (FDCPA);
x
Evaluate new processes and procedures established as a direct result of the
Consent Orders for additional monitoring and testing opportunities; and
x
Complete testing to validate In-business Risk’s new QA program identified
above.
As part of enhanced testing for fees, specific testing is being developed against processes to
manage and update fee tables in accordance with state fee restrictions and within state
foreclosure and bankruptcy matrices, as well as against associated customer correspondence.
As the First Line of Defense, Business management is responsible for assessing and controlling
the regulatory compliance risks inherent in their business activities. The Business designs and
implements controls to mitigate regulatory risk and performs in-business monitoring and
assessment or testing activities to ensure control effectiveness. Based on the results of Citi’s
evaluation, the following will occur:
x
When conducting the control assessment, the Business will consider, in
addition to its own monitoring and testing activities, all relevant results from
ARR and other Independent Control functions, as well as regulatory
examination results;
x
Consistent with the new ORM Policy, issued in April 2011, the Business will
establish Key Operating Risks, including regulatory compliance, and develop
relevant KRIs; and
x
In-business Risk will formalize the QA program to assess operational risk as
well as regulatory compliance effectiveness of foreclosure, Loss Mitigation,
and bankruptcy processes. Coverage includes validation of the accuracy of
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CONFIDENTIAL
MERSCORP documents, as well as evaluation of law firms’ uploading of
required documents according to the various stages of foreclosure.
As the Second Line of Defense, following Reserve Bank regulatory guidance in FRB SR 08-8,
functions that are independent of business lines develop and execute the independent regulatory
compliance monitoring and testing programs. Monitoring takes many forms, including:
x
Reviewing and testing client communications;
x
Direct surveillance or review of other control units’ surveillance and
exception reports;
x
Reviewing control assessment results;
x
Ongoing review of business processes and adherence to policies and
procedures;
x
Tracking external examinations relating to regulatory compliance;
x
Participating in corporate governance committees where Compliance risk
issues are regularly addressed; and
x
Participating in system development and User Acceptance Testing related to
legal or regulatory-related business processes, including fee processes and
associated customer communications.
In addition to enhancing the testing scope, frequency, and coverage as described above, the
independent testing program will also be strengthened by applying alternative testing
methodologies, including, but not limited to, data retrieval, end-to-end process review, and
exception reporting, to enhance Citi’s ability to detect weaknesses efficiently and effectively.
(c)
Ensure that policies, procedures and processes are updated on an ongoing
basis as necessary to incorporate new or changes to the Legal Requirements and
supervisory guidance of the Board of Governors;
Legal and Compliance have created a network of subscriptions to outside services, law firm
advisories, regulatory updates, and other sources that are designed to enable Legal, Compliance,
and the Business to identify and act upon relevant changes. Prior to formal submission to the
change control process, enhanced requirements identified by Legal in this manner will trigger the
production of a formal Legal Alert, including the substance and effective date of the new
requirement, which will be communicated to the appropriate areas of the impacted businesses.
This overview will also be provided to Compliance, which in turn will update the RRI.
For Mortgage Servicing Activities, Citi currently has in place a change management process that
addresses implementation of regulatory changes, changes in policies and procedure, and business
process changes. The Legal Alert and RRI update will trigger a change control request, which is
initiated with supporting documentation, as appropriate. Businesses may also use the process to
initiate change requests for other reasons. The request will be reviewed for gaps, completeness,
and exception qualifications before it is approved for implementation.
-8-
CONFIDENTIAL
Although the U.S. Residential Mortgage Servicers generally follow a similar process, Citi will
implement minimum standards to build a consistent change management framework across its
U.S. Residential Mortgage Servicers, beginning with a standardized template for the change
control request. In order to support management reporting requirements, the existing Change
Control management teams will serve as gatekeepers of all policies and procedures published
and housed within a centralized repository. The communication process will also be enhanced to
meet the expected increase in both volume and frequency of the regulatory changes expected due
to state law updates and recent federal regulatory reform legislation. Within this framework,
once implementation occurs, a validation process will confirm the effectiveness of the change.
-9-
Paragraph 4 – Exhibit 1
Mortgage Servicing Compliance Program
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
CITI MORTGAGE SERVICING
COMPLIANCE PROGRAM
OWNER:
MORTGAGE PRODUCT COMPLIANCE
CONTACT(S):
DIRECTOR, MORTGAGE PRODUCT COMPLIANCE
ISSUE DATE:
JULY 2011
REVISED:
CONTACTS UPDATED:
JULY 2011
CITI INTERNAL
Table of Contents
1 OVERVIEW
1
1.1 BACKGROUND
1
1.2 MAJOR CITI FRANCHISE-WIDE FRAMEWORKS AND PROGRAMS
1
1.3 MORTGAGE SERVICING IMPLEMENTATION OF GLOBAL FRAMEWORK
2
1.4 PROGRAM OBJECTIVES
3
1.5 SCOPE
5
1.6 PROGRAM ADMINISTRATION
5
2. PROGRAM GOVERNANCE
6
2.1 PROGRAM DEVELOPMENT AND OVERSIGHT
6
3. PROGRAM COMPONENTS & REQUIREMENTS
9
3.1 KEY PROGRAM COMPONENTS
9
3.2 IDENTIFICATION OF COMPLIANCE RISK: COMPLIANCE ANNUAL RISK
ASSESSMENT (CARA)
9
3.3 REGULATORY REQUIREMENTS INVENTORY
10
3.4 POLICIES AND PROCEDURES
11
3.5 ANNUAL COMPLIANCE PLAN
13
3.6 MONITORING AND ASSESSMENT
13
3.7 TESTING
15
3.8 COMPLIANCE TRAINING
17
3.9 MIS AND REPORTING
19
3.10 ISSUE TRACKING AND REMEDIATON
22
CITI INTERNAL
3.11 CHANGE CONTROL
22
3.12 COMPLAINT MANAGEMENT
23
3.13 COMPLIANCE STAFFING MANAGEMENT
23
3.14 THIRD PARTY OVERSIGHT AND COMPLIANCE
24
3.15 ONGOING PROGRAM
MATRIX (RRM)
25
DOCUMENTATION:
REGULATORY REQUIREMENTS
4. MORTGAGE SERVICING COMPLIANCE PROGRAM ROLES AND
RESPONSIBILITIES
26
4.1 MORTGAGE PRODUCT COMPLIANCE
26
4.2 BUSINESS MANAGERS
27
4.3 LEGAL
29
4.4 CONTROL AND EMERGING RISK (CER)
30
4.5 QUALITY ASSURANCE (QA)
30
4.6 AUDIT AND RISK REVIEW (ARR)
31
4.7 ALL EMPLOYEES
32
4.8 HUMAN RESOURCES
32
APPENDIX A - DEFINITIONS
34
APPENDIX B - SUPPORTING COMPLIANCE PROGRAMS/POLICIES
36
CITI INTERNAL
1 OVERVIEW
1.1
BACKGROUND
It is the policy and fundamental objective of Citigroup Inc. and Citibank, N.A.
and their subsidiaries and affiliates (together “Citi”) to provide products and
services, and conduct all activities, in compliance with both the letter and
spirit of all applicable laws, rules, regulations, regulatory guidance and Citi
internal polices and commitments. In view of the breadth of its global reach
and business, and the nature, number and complexity of laws, regulations
and supervisory guidance to which it is subject, Citi established a Global
Compliance Control Policy (“Global Policy”) and related programs and
processes. The Global Policy mandates an independent Compliance
function, and a consistent risk-based approach and control framework,
including independent compliance testing, to manage and mitigate
compliance risk and to assess compliance with the regulatory requirements
governing Citi's various activities. The Policy has the full support of
executive management and the Board and have established such as a top
priority throughout Citi.
This Mortgage Servicing Compliance Program ("Program") applies to all
U.S. Residential Mortgage Servicers responsible for residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities (collectively, the
"Mortgage Servicing Activities" or "Mortgage Servicing").
1.2
MAJOR CITI FRANCHISE-WIDE FRAMEWORKS AND PROGRAMS
Citi has adopted and maintains a number of programs and frameworks that
are integral to the sustainability and effectiveness of a sound compliance
program. Several of the most significant, which will be relied upon to
support the Mortgage Servicing Compliance Program, are described below:
i. Code of Conduct: Citi, through its Chief Ethics Officer and Ethics Office
maintains and regularly updates the firm-wide Code of Conduct and Ethics
Hotline. Every employee around the world receives the Code of Conduct
and periodic refresher training, and has access to the Hotline to report
ethics matter or suspected violations of policy through a neutral,
confidential channel.
ii. Control Framework: Citi’s internal control framework rests upon a
“Three Lines of Defense” approach:
x
Business divisions (including in-business risk management) own
and have primary responsibility for managing their risks with
support from functional specialists (e.g., Operations & Technology);
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x
The "Second Line of Defense" comprises the Control Functions
(including Compliance, Independent Risk, and Control and
Emerging Risk) independent of the business, which provide
advice, tools, standards, methodologies, processes and oversight
of controls used by the business divisions to mitigate and manage
risks; and
x
Audit & Risk Review (ARR) conducts independent reviews on the
first two lines of defense based on a Board-approved audit plan and
on ARR's audit risk assessment.
iii. Independence of functions: Establishment and maintenance of
independent functions, including Compliance, is fundamental to Citi’s
control framework. Management reporting for the Global Compliance,
Control and Emerging Risk, Independent Risk and Audit & Risk Review
occurs outside the business management chain, and performance
reviews, compensation, bonuses and staffing are managed completely
independent of the business. Capacity planning and staffing decisions are
driven by risk and need analysis, rather than business performance. The
heads of these functions interact directly with the Board Audit Committee
and the Citi Chief Auditor has a reporting line to the Board Audit
Committee.
iv. Compliance Performance Impact on Business Manager Compensation:
Citi has a formal process, administered by Human Resources, to ensure
that information and assessments regarding the compliance and
regulatory performance of business managers are incorporated by
executive management in determining the annual performance
management rating and incentive compensation.
v. Specialized US or Global Programs: In addition to the Code of Conduct
and Control framework mentioned above, Citi maintains specialized
compliance programs through utilities or control functions. These include
Fair Lending, Anti-Money Laundering and Privacy, as well as programs
and governance processes directed specifically at maintenance of
appropriate standards for consumer protection, responsiveness to
consumer complaints, avoidance of conflicts of interest, enhancement of
consumer service levels and in the Mortgage Servicing area, programs for
assisting consumers that are specific to Citi.
1.3
MORTGAGE SERVICING IMPLEMENTATION OF GLOBAL FRAMEWORK
This Mortgage Servicing Compliance Program (“Program”) implements the
Global Policy and control framework, and is structured to proactively
identify, assess, control, monitor, test and report compliance risks
applicable across Citi's Mortgage Servicing Activities.
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Consistent with the Global Policy, business managers have the overall and
ultimate responsibility for the management of day-to-day compliance risk in
their lines of business. Mortgage Servicing Business Managers, which
includes those managing supporting operations and technology teams, as
the "First Line of Defense," must drive a compliance culture, establish
effective compliance processes, build policies, procedures and controls into
their business delivery and operations functions and take compliance
performance into account in assessing performance of their units and staff.
The “Second Line of Defense” includes a number of independent, global
functions, including Compliance, Risk and Control & Emerging Risk (CER).
Compliance administers this Program, which establishes, as applied to
Mortgage Servicing, substantive and actionable guidance to business
managers on the establishment of their compliance policies, procedures and
controls. The Program further sets standards for conducting independent
compliance monitoring and reporting of compliance risks and required
actions to Business executive management and Global Compliance.
The Program recognizes that other global functions managed outside the
business conduct independent monitoring and testing of the business
controls.
Audit and Risk Review (ARR), the "Third Line of Defense," is responsible for
conducting independent testing of the design and operating effectiveness of
the business unit compliance controls and the overall Program. The Three
Lines of Defense are further strengthened by the Human Resources,
Finance and Legal Departments.
1.4
PROGRAM OBJECTIVES
This Program establishes the framework, structures and processes for
compliance risk management of Mortgage Servicing Activities. The
objectives for this Program include:
x
Building an environment that fosters a strong proactive culture of
compliance in which compliance is an integral part of the Mortgage
Servicing business strategy and operating environment, and the
principles of responsible finance and customer centricity are central to
decision making;
x
Establishing the governance structure for Program activities;
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1.5
x
Establishing and documenting the compliance roles and responsibilities
of Business Managers, employees, Compliance and other control
functions, including ARR;
x
Establishing compliance risk management standards and processes that
enable management to proactively identify, measure, assess, monitor,
test and report Mortgage Servicing compliance risks throughout Citi;
x
Maintaining independent compliance monitoring, testing and issue
tracking and corrective action/resolution processes;
x
Overseeing Mortgage Servicing business lines in their development,
implementation and monitoring of compliance policies, procedures and
controls to meet their compliance obligations;
x
Assisting Mortgage Servicing business line management in assessing
the impact of changes in regulations and business operations on the
compliance risks and controls affecting their businesses;
x
Fostering an environment of timely, clear and open communication,
within the business and Citi’s customers, and escalation of compliancerelated matters;
x
Providing compliance risk reporting to business senior management;
x
Maintaining escalation protocols of compliance risk issues to senior
management and appropriate committees;
x
Advising business line management on meeting strategic goals and
objectives in accordance with applicable compliance requirements,
prudential standards and Citi's compliance risk appetite; and
x
Developing and implementing training and educational programs that
foster a better understanding of Citi's and its employees’ regulatory
compliance obligations and responsibilities.
SCOPE
This Program covers all Mortgage Servicing activities and applies to all
U.S. Residential Mortgage Servicers and their employees engaged in
Mortgage Servicing (“Covered Business Units”).
Additionally, this Program extends to activities performed by third parties
engaged in servicing loans for or on behalf of Citi. Acquisition of U.S.
Residential Mortgage loans or interests therein by a Citi business unit other
than to hold do not (i.e., as part of trading activities) alone qualify those
businesses as Covered Business Units.
The Program encompasses compliance with federal law and regulations,
state law requirements, bank supervisory guidance requirements,
directives issued by Fannie Mae, Freddie Mac, Federal Housing
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Administration ("FHA"), Veterans Administration (" VA"), and MERSCORP,
Inc. ("MERS") rules that have an impact on real estate lending, and specific
internal Citi policy requirements as appropriate.
1.6
PROGRAM ADMINISTRATION
Citibank's Chief Compliance Officer has appointed a Director of Mortgage
Product Compliance (MPC Director). The MPC Director is responsible for
maintaining this Program document. The business unit, Compliance and
other control functions' responsibilities for executing the Program are
outlined in Section 4 of this Program. The Program shall be updated as
necessary and reviewed by Compliance at least annually. Material
changes to the Program must be reviewed and approved in the manner set
forth in Program Governance, Section 2 of the Program.
1.7
PROGRAM ADOPTION AND EFFECTIVE DATE
This Program is effective as of July 13, 2011. Covered Business Units will
fully implement the Program no later than August 11, 2011. This Program
is meant to be read in conjunction with existing policies and procedures. In
the case of a conflict with respect to existing policies and procedures, this
Program takes precedence.
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2 PROGRAM GOVERNANCE
2.1
PROGRAM DEVELOPMENT AND OVERSIGHT
This Program was developed with input and approval from an
Implementation Committee, Executive Steering Committee (ESC) and
Senior Executive Committee and was approved by the Citibank Chief
Compliance Officer for initial adoption.
Beginning in the first full quarter following adoption of the Program, the
ESC and MCC will review data and information regarding the
implementation and performance against the Program at least quarterly.
Any proposals for amendments to the Program, must be made in
compliance with the Consent Orders dated April 13, 2011, and must be
approved by the Citibank Chief Compliance Officer, reviewed with the Real
Estate Operations Steering Committee (REOSC) and ESC and presented
to the MCC for approval. MCC approval is required prior to the petitioning
of the OCC Deputy Comptroller for the approval of any material
amendments to the Program.
At the management level, the REOSC oversees policies, procedures,
processes and controls and provides senior management oversight of this
Program across Citi businesses engaged in Mortgage Servicing.
Membership or participation in the REOSC is determined by its charter.
x
The REOSC meets at least quarterly or as needed, and reviews existing
governance, policies, and procedures to identify gaps and weaknesses.
Through these reviews, the REOSC assures that the businesses
proactively identify controls gaps as they relate to emerging issues
collectively and consistently, anticipate similar issues throughout the
business units, and see that the business units, develop action plans to
mitigate future exposure. The REOSC is also tasked with solving
problems that emerge between and among business functions and
communicating cross-business impacts. The REOSC monitors progress
against Mortgage Servicing Corrective Action Plans (CAPs) and
maintains full accountability for confirming the timely resolution of
identified issues.
x
The REOSC will receive regular reports from the MPC Director regarding
the health and operation of this Program. Additionally, the REOSC will
periodically invite the heads of Independent Risk, Quality Control and
ARR for Mortgage Servicing to report on the results of their monitoring
and reviews, and will further assess the authority, resources and
business access of these individuals to perform their duties.
x
The REOSC will review sufficient MIS and reports from the MPC Director
and other control function heads to confirm that identified deficiencies
are corrected in a timely manner.
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In addition to the above, Citi has established a number of special purpose,
cross-functional committees to provide oversight and channels of escalation
for specific issues:
x
Business Practices Committee: Citi’s business practices committees
review business activities, sales practices, products, potential conflicts of
interest, complex transactions, suitability and other reputational concerns
providing guidance to ensure that Citi’s business practices meet the
highest standards of ethics, integrity and professional behavior. The
business practices committees guide the development of business
practices and may change them when necessary or appropriate. These
issues are reported on a regular basis to the Citi Business Practices
Committee and the board.
x
Business Risk and Control Committee (BRCC): Quarterly BRCC
meetings serve as an internal discussion and oversight body for senior
management on significant risk, compliance, control and legal issues.
Additional objectives include the review of risk, compliance and control
related performance and communication with senior executives on
material external factors impacting our business (e.g. macro-economic,
legislative).
x
Anti-Money Laundering Committee: The Global Business Anti-Money
Laundering Risk Committee meets monthly to review and discuss AntiMoney Laundering related matters.
x
CRA/Fair Lending Committee: The CRA/Fair Lending Committee meets
quarterly to review and discuss CRA and Fair Lending related matters,
including, but not limited to business' compliance performance against
Fair Lending and CRA requirements; Fair Lending and CRA exams; Fair
Lending and CRA issues identified during testing or exams; regulatory
changes or other policy changes that have potential Fair Lending and/or
CRA impact.
x
New Product and Service Approval Committees: Pursuant to the New or
Complex Products and Services Policy, Citi requires that new, complex
or significantly altered products, services or business lines that may
materially alter Citi’s franchise risk profile undergo independent, cross
functional review before launch. The Consumer Product Approval
Committee (CPAC) and the Capital Markets Product Approval
Committee (CMAC), chaired by Independent Risk, establish a rigorous
and consistent framework for the escalation, review, and approval of
new or enhanced products or services before they are offered to Citi
customers. All covered products must have formal business senior
sponsorship, and must present a documented proposal including a
description of potential risks and mitigants, and an anti-money
laundering risk assessment, before they are formally approved by the
relevant committee. Committee members must include, at a minimum,
the relevant senior Risk, Compliance, ARR, Legal, Finance and
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Operations representatives. Meetings are formal and minuted. To the
extent that new Mortgage Servicing products or services meet CPAC
review requirements, they are subject to this process.
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3 PROGRAM COMPONENTS AND REQUIREMENTS
3.1
KEY PROGRAM COMPONENTS
In addition to a sound governance structure and franchise-level framework,
the key components of the Mortgage Servicing Compliance Program are as
follows:
A. Identification and assessment of compliance risks;
B. Identification, updating and dissemination of applicable laws, regulations,
rules, supervisory guidance, regulatory developments and significant
internal or external commitments;
C. Establishment and maintenance of policies, standards and procedures;
D. Planning for continuous enhancement
E. Monitoring and testing
F. Training and awareness
G. MIS and reporting
H. Tracking and remediating issues
I. Complaint management
J. Staffing and capacity planning
K. Oversight of Third Party Vendors
L. Assignment of Roles and Responsibilities
3.2
IDENTIFICATION OF COMPLIANCE RISK: COMPLIANCE ANNUAL RISK ASSESSMENT
(CARA)
The Mortgage Servicing annual compliance risk assessment process
follows a repeatable, formal process conducted by the Global Compliance
Department, relying on quantitative and qualitative data and input from
business units, functions and external sources as appropriate. Inputs
encompass information that allows Compliance to consider factors including
changes to business strategy and products or services; changes in business
environment; performance metrics; bank supervisory results; results from
ARR, CER, and other monitoring and testing activities; impact of current and
anticipated regulatory change and regulatory or operational risk events.
The output of the process helps drive the annual compliance plans and
objectives, training plans, compliance monitoring and testing programs,
resource deployment and activity prioritization.
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The compliance risk assessment results must be shared with Mortgage
Servicing business heads, control functions, the REOSC and the MCC. The
results shall also be provided to In-Business Risk for inclusion in its
comprehensive annual mortgage servicing risk assessment (CAMSRA).
3.3
REGULATORY REQUIREMENTS INVENTORY
Citi utilizes an internal convention known as the Regulatory Requirements
Inventory (RRI) to capture regulatory requirements and standards that form
the basis of its compliance and control programs.
For Mortgage Servicing, the RRI includes federal law and regulations, state
law requirements, bank supervisory guidance requirements, directives
issued by Fannie Mae, Freddie Mac, FHA, VA, any MERS rules that have
an impact on real estate lending, and specific internal Citi policy
requirements as relevant.
To support comprehensive action, consistent with the Consent Order, the
process for establishing the enhanced 2011 RRI for Mortgage Servicing
includes obtaining a survey from qualified attorneys covering the above
listed standards. This is augmented by Citi policy requirements and
supervisory guidance specific to Citi Mortgage Servicing. Going forward,
the RRI will be maintained by Compliance, and reviewed and approved by
Legal in accordance with prevailing Citi practices.
i. Regulatory Change Management:
The RRI must be updated with sufficient frequency to reflect compliance
with new and changing legal, regulatory and other standards. It is the
responsibility of Citi Legal to maintain appropriate subscription and other
relationships to assure timely receipt of updates to federal regulations,
state laws, regulatory guidance, and directives issued by Fannie, Freddie,
FHA, and VA from various sources such as AllRegs, House Law, and
Westlaw, as well as to remain current on membership requirements of
MERS and applicable investor rules.
Upon receipt, new requirements are interpreted by Legal, who in turn
provides a summary overview of the requirements, identification of the
functional areas of the business impacted, and the effective dates of the
new requirements. This overview is provided to Compliance, who updates
the RRI, and provides it to a designated Management Committee
(Oversight Committee). This Oversight Committee reviews and
determines the actions necessary to fully implement the controls
necessary to comply with the new requirements.
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Covered Business Units, with support from Compliance and other
functions, as necessary, are responsible for developing and managing
action plans to implement all new and changed regulatory requirements.
Compliance shall review and approve all regulatory change
implementation action plans.
The Oversight Committee tracks and confirms the implementation of the
requirements, including updating of policies and procedures, and training
curriculum, as needed. The Oversight Committee also monitors validation
testing of implemented requirements, as needed, to make sure new
processes are functioning as intended.
Where changes to regulatory or other requirements require changes to
technology and automated process, Mortgage Servicing relies upon the
current established Citi process for producing and validating technology
change requests. This process includes input from Compliance.
3.4
POLICIES AND PROCEDURES
This Program requires adherence to and incorporates by reference all
applicable Citi policies and procedures. In addition, each Covered Business
Unit must establish, with guidance from Legal, Compliance, and other
functional or SMEs as necessary, policies and procedures governing the
conduct, oversight and monitoring of Mortgage Servicing Activities to the
extent that they are needed to augment or implement Citi policies.
Covered Business Units' policies and procedures must be documented
utilizing a consistent template, stored centrally and published to all relevant
employees. Each policy or set of procedures must have an identified owner,
who is responsible for ensuring that the policy is updated and approved
appropriately. In addition to scheduled reviews or updates, appropriate
reviews, and where determined necessary, changes to policies and
procedures should be initiated by the Covered Business Unit owner upon
the occurrence of any of the following:
x
Notification of a change in law, regulation, rule or supervisory guidance;
x
Changes to the relevant business process; or
x
Changes to the relevant technology or system.
Covered Business Units must maintain processes for the approval of
Mortgage Servicing policies, procedures and manuals. The current Real
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Estate Policies and Procedures Approval Process, in which Compliance
participates, may be used for this purpose.
Each Covered Business Unit is responsible for creating policies and
procedures that are sufficiently detailed to support the repeatable,
sustainable operation of all processes at a level that meets required
standards.
At a minimum, Covered Business Units must maintain documented
procedures meeting the standards of this Program and any applicable Citi
policies to address the following requirements:
x
Fair Lending;
x
US Bankruptcy Code;
x
Servicemembers Civil Relief Act (SCRA);
x
MERSCORP membership rules;
x
Government Sponsored Enterprise and investor servicing guides;
x
Home Affordable Modification Program;
x
FDIC loss share agreements;
x
Oversight of third parties engaged in any aspect of mortgage servicing or
foreclosure on behalf of Citi, including brokers and attorneys;
x
Oversight of accuracy, completeness and reliability of assertions made
on behalf of Citi;
x
Oversight of execution and notarization of affidavits used in foreclosure
proceedings;
x
Review and approval of standardized affidavits and declarations used in
foreclosures;
x
Documentation of ownership of promissory notes and mortgages;
x
Creation of audit trails for all factual information in foreclosure affidavits
or declarations;
x
Foreclosure sales (including calculation of default period, amounts due
and compliance with notice requirements);
x
Calculation and assessment of fees, expenses and other charges to
borrowers;
x
Retention and tracking of mortgage documentation;
x
Audit, quality control and testing programs and plans;
x
Hiring and staffing practices;
x
Capacity and work load planning;
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x
Single Point of Contact;
x
Dealing with customers in bankruptcy;
x
Complaint management and escalation;
x
Borrower communications; and
x
Such other policies or procedures as Legal, Compliance or bank
supervisors may direct.
In addition, Mortgage Servicing must adhere to all other Citigroup and
Citibank, N.A. polices, and adopt such procedures as these polices may
require. Further information and polices are available to all employees via
the on-line Citi Policy Directory.
3.5
ANNUAL COMPLIANCE PLAN
Citi Global Compliance sets the approach, timeline and standards for the
process that result in the production of Annual Compliance Plans, which are
produced for key business and country programs. In general, the Annual
Compliance Plan documents those initiatives, projects and activities that
serve to drive continuous program enhancement, and address emerging or
topical issues. Activities are captured in the plan as a series of objectives
that require prioritization, and action outside established routines and
requirements in order to achieve them.
Each Compliance team across Citi produces an Annual Compliance Plan, at
the direction of Global Compliance. For Mortgage Servicing, the MPC
Director will be accountable for producing an Annual Compliance Plan for
Covered Business Units. This plan shall include the Monitoring inventory
and Compliance Testing plan. The plan will be shared with the REOSC
annually, and the MPC Director will update the REOSC quarterly on
progress against objectives.
3.6
MONITORING AND ASSESSMENT
Monitoring and assessment activities include the work performed by
business units, operations, Compliance, CER and other functional groups to
review the ongoing performance of processes and controls, and to assess
these and other activities for compliance with laws, rules, regulations, and
related Citigroup policies. Issues identified during monitoring activities must
be reflected in a Corrective Action Plan (CAP), with a business owner and
due date. Compliance must approve the content of the CAP, and document
any instance in which it is determined that a CAP is unnecessary.
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This Program requires, at a minimum, the development and maintenance of
the following:
x
An inventory of the core monitoring activities performed by the
Compliance Department as part of its responsibilities, to be reviewed
and updated by the MPC Director at least annually based upon the
compliance risk assessment. The inventory shall include information on
the scope, frequency and outputs for the planned monitoring activities;
x
Implementation of appropriate in-business and operations quality
assessment and/or quality control activities, to include performance
standards and reporting, to be incorporated into REOSC and other
management reporting at appropriate intervals; and
x
Monitoring activities specifically focused on the requirements of the
Consent Orders.
Monitoring may encompass many activities including:
x
In-process quality assurance and quality control activities, including
maker/checker activities, change management processes, management
review;
x
Establishment and review of Key Risk Indicators, exception reporting
and management metrics;
x
Reviewing client communications;
x
Direct surveillance of business transactions or review of business or
other control unit’s surveillance reports;
x
Oversight of complaint handling;
x
Conducting and/or reviewing self assessment and other test results;
x
Ongoing review of business processes and adherence to policies and
procedures;
x
Tracking corrective action plans (CAPs) for CER and ARR reviews and
external examinations relating to legal/compliance;
x
Participating in corporate governance committees and other meetings
where compliance risk issues are regularly addressed;
x
Participating in system development/UAT testing related to legal or
regulatory related business processes; and
x
Appointment of relationship managers, committees or other personnel to
oversee performance of specific third party vendors or service providers.
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Monitoring activities relating to the requirements of the Consent Orders shall
include the following targeted monitoring to be established and implemented
no later than August 11, 2011, including but not limited to:
x
Incorporation of Consent Order requirements into the inventory of
Compliance monitoring activities;
x
Quality assurance protocols and compliance oversight of Single Point of
Contact and other customer telephone or electronic communications;
x
Quality assurance and compliance oversight of the foreclosures process,
including work of third party law firms;
x
Monitoring and oversight protocols for third party vendors and servicers;
x
Monitoring protocol for identification and treatment of borrowers in
bankruptcy;
x
Monitoring protocol for identification and treatment of borrowers covered
by the SCRA;
x
Monitoring protocol for MERSCORP membership;
x
Quality assurance protocols for documents location and retention; and
x
Quality assurance protocols for fee calculation and assessment.
For each of the above required monitoring activities, the process must
include identification of a responsible monitoring process owner, and as
appropriate, periodic progress reports that will be shared with business
heads, the REOSC and the Citibank Chief Compliance Officer upon
request. Where it is possible to build automated or systemic controls into
processes, or where independent testing processes have been established,
monitoring or manual oversight of the process may be rendered
unnecessary. In such cases, changes to or exceptions from above required
monitoring regimes shall be approved in writing by the REOSC and the
MPC Director upon request by the executive process owner. Testing may
also be used in place of, or alongside monitoring, provided it meets both the
requirements in this section and section E below.
3.7
TESTING
i. Independent Compliance Testing: Independent Compliance Testing is a
risk-based, point-in-time assessment or validation of controls or
procedures to determine whether controls are reasonably designed and
functioning effectively. The testing activities must conform to the Global
Compliance Policy and CER standards.
Generally testing activities fall into one of the following three categories:
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x
Mandatory – Tests mandated by regulatory requirements, and/or tests
performed by Compliance / CER that have been agreed to with
regulators and pre-defined to require ongoing assessment and testing.
Where the mandatory requirement allows the defined elements to be
tested over multiple years, the frequency is determined using a riskbased approach, by assessing the inherent risk and control adequacy
of the individual entities.
x
Targeted – Tests determined based on risk assessments, including but
not limited to the compliance risk assessment, of the current business
and regulatory environment. These tests are defined during the annual
test planning process and their applicability is re-examined on an
ongoing basis. Targeted reviews are designed to verify the
effectiveness of key controls to mitigate risks related to compliance
with selected laws, regulations, external standards, and existing firm
policies. This testing includes reviews of specific products (including
new products and policies).
x
Ad hoc – Tests triggered by internal or external events, including
organizational or regulatory changes, and/or through the monitoring of
Key Risk Indicators (“KRIs”) and other reporting methods. These tests
are based on risks assessed at a point in time, as they are identified,
and are incorporated into the testing plan as needed.
Independent Compliance Testing is conducted by CER pursuant to an
annual plan developed in collaboration with Compliance. The plan must
be approved by the MPC Director and CER Consumer head annually. The
plan must include an analysis of staffing capacity. CER personnel
assigned to Mortgage Servicing must possess the requisite skill and
knowledge to complete the testing. Other independent resources such as
ARR, Compliance or external auditors, provided they possess the
requisite subject matter expertise, may assist in conducting independent
compliance testing in accordance with applicable Reliance Standards.
All tests must be conducted using Citi’s current guidelines with respect to
sampling and reporting. Test results are to be made available to the
Compliance Department and business unit Management as soon as
available. Compliance will track results over time to identify trends and
program needs. Identified issues must be appropriately reflected in a
Corrective Action Plan (CAP), with a business owner and due date.
Compliance must approve the content of the CAP, and document any
instance in which it is determined that a CAP is unnecessary. The REOSC
should receive at least quarterly reporting of summary results, CAP
progress and any delays in testing plan or CAP fulfillment.
ii. Business Unit and Other Testing: Covered Business Units or other
functions may choose to utilize testing instead of, or in combination with,
monitoring and assessment tools described in Section 3.6 above.
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3.8
COMPLIANCE TRAINING
To be effective, compliance policies, procedures and controls must be
adequately published and understood. Training thus is an essential
complement to all other business and compliance activities.
Each Covered Business Unit is accountable for maintaining a
comprehensive compliance training program and for ensuring that
employees receive training on all applicable compliance requirements.
Training content must be reviewed and updated to reflect changes in the
RRI. The required elements of a Covered Business Unit compliance
training program areas are set forth below.
If a Covered Business Unit already maintains a training program, or is part
of a larger business group with a training program, the Covered Business
Unit may utilize that program to provide Mortgage Servicing training
required pursuant to this Program provided that the training program
includes all elements and meets all requirements of this section, specifically
identifies the segment of Covered Business Unit employees, and specifically
incorporates and reports on Mortgage Servicing training as required below.
i. Training Needs Assessment: On an annual basis, Human Resources, in
conjunction with the Covered Business Unit and Compliance, will oversee
the completion of a training needs assessment. This training needs
assessment process includes, at a minimum, consideration of the
following:
x
Mortgage Servicing Compliance Annual Risk Assessment;
x
Customer related issues/complaint trends;
x
Relevant monitoring and testing results;
x
Regulatory examination results and supervisory guidance;
x
Audit and Risk Review results;
x
Employee on-boarding and turnover statistics;
x
Role of third parties in Mortgage Servicing activities;
x
Performance against the Consent Orders, including the implementation
of newly developed policies, processes and procedures; and
x
Impact of new and/or changed laws and regulations or standards,
changes in policies or procedures, new products, and changes to
systems and applications.
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Human Resources will determine, with input from Compliance, Legal and
the business, whether and how to segment the Covered Business Unit
employee populations for purposes of assessing and meeting training
needs.
ii. Training Plans: Based upon the Needs Assessment, each Covered
Business Unit must establish a Mortgage Servicing Training Plan or
calendar to provide every employee with the skills and knowledge needed
to protect the customer and Citi through defect-free, compliant execution
of their job functions. Management should also use elective coursework
to continually raise staff skill levels, productivity and improve business
results.
a. The Training Plan must address the on-boarding of new
employees, as well as refreshing, maintaining and appropriately
increasing awareness, skills and knowledge of existing employees.
b. The Compliance Department through the MPC director or
delegate, must on an annual basis, review the Needs Assessment,
the Business Unit Training Plan and the compliance risk
assessment, and determine what Compliance training requirements
must be included in the Covered Business Units' Training Plan, or
specific training modules, to address compliance and regulatory
issues.
iii. Content and Delivery: Scope and content of training is based upon
requirements applicable to each business, and tailored as necessary to
reflect the responsibilities of each employee unit or segment. The MPC
Director is responsible for making sure that Compliance training content is
provided by qualified SMEs, and delivered with appropriate expertise. The
majority of content will be delivered on-line through the Global Learning
Management System (GLMS) or face to face. GLMS deploys archives and
tracks attendance for training courses scheduled or delivered using the
system. Staff organizing or delivering face-to-face training are accountable
for assuring that the training is tracked in GLMS. Employees who take
individual courses offered outside of Citi are responsible for entry into their
GLMS profile for tracking
In addition, Citigroup and Citibank, N.A. may require completion of certain
training on a periodic basis consistent with global policies and
requirements. Training may also be augmented by product groups,
functions (e.g., Real Estate Lending, Information Security and Global
Compliance) or regional business groups (e.g., North America Consumer
Banking).
iv. Training Monitoring and Tracking: The Program incorporates controls to
monitor employees’ compliance with training requirements. Training
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reports are available on demand and produced at regular intervals to
provide business and operations management with the information
needed to monitor compliance with all applicable requirements. The
Compliance Department periodically reviews exception reports on
required training relative to Mortgage Servicing to validate completion. In
the event of material lapses in training completion, the Compliance
Department will escalate concerns to management.
Completion of required training is a component of the annual performance
and development reviews delivered to all employees. It is the
responsibility of business unit managers to track and follow up with
employees who fail to complete training requirements or assignments in a
timely manner, and to assist employees in managing their workloads and
schedules to accommodate their training obligations.
v. Compliance Department Role in Training: In addition to those described
above, Compliance has several roles relevant to training which include:
3.9
x
Participation in the Covered Business Unit's annual training needs
assessment and training plan development processes;
x
Ongoing review and approval of new or revised training materials;
x
Development of training content for key regulatory training programs;
x
Monitoring business performance against delivery and attendance of
training as required and within prescribed timeframes;
x
Recommending training enhancements to address issues found
through oversight reviews;
x
Overseeing and confirming revision of applicable training to reflect
changes in the regulatory environment; and
x
Participation in Compliance training as required to enhance and
maintain expertise level.
MIS AND REPORTING
MIS is a critical component of the compliance control framework for
overseeing all aspects of Mortgage Servicing. Compliance MIS is to be
managed consistent with Citi's current plan for enhancing its MIS for
Mortgage Servicing ("MIS Plan"). In general, key elements of the plan
which relate to the Mortgage Servicing Compliance Program are:
x
Enhancement of reports to the Board of Directors and senior
management;
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x
O & T development of data validation and reconciliation processes to
ensure that records pertaining to Mortgage Servicing Activities are
accurate;
x
Enhancement of change management policies and procedures to track
changes to standard MIS and reports to the Board of Directors and
senior management reports; and
x
Augmentation of existing MIS reports to include information on the
single point of contact (“SPOC”) system.
Through ongoing interactions with business process owners, the
Compliance Department will have access to available performance and
other MIS to assist the function in performing various Program activities.
MIS is used for trending and analysis in key operations areas. The
comparative analysis of data across sources assists in early identification
of problems or assurance of continued compliance.
Reporting and Escalation
a. Escalation: All employees are required to observe the escalation
and reporting policies or processes in place across Citigroup to
escalate Mortgage Servicing issues as appropriate.
b. Compliance Department Reporting Out: Reporting of compliance
risks, issues and results identified through assessment and
measurement protocols (e.g., review of MIS) is a key component of
a robust compliance governance program. Compliance will
communicate the results of its oversight activities both within the
Global Compliance management chain and to Board and
management committees as described in this Program. Reporting
will include at a minimum:
x
Quarterly Updates to the MCC of the Citigroup / Citibank Board
of Directors;
x
Quarterly Updates to the REOSC and ESC;
x
Quarterly Updates to Business Risk & Control Committees
(BRCC’s) – Compliance sections in all individual BRCC’s; and
x
CBNA Monthly Updates to Global Regulatory & Compliance
Committee (chaired by CBNA Chief Compliance Officer).
At a minimum, Compliance will also cover significant Mortgage
Servicing developments, as appropriate, in the following reports:
x
Real Estate Lending Weekly Compliance Update;
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x
Citigroup Monthly Compliance Report; and
x
Established committee reporting.
The information that Compliance reports on a regular basis
includes, but is not limited to:
x
Progress vs. Annual Compliance Plan;
x
Key results or status updates of internal and external
examinations including self testing;
x
Significant Compliance issues and events;
x
Changes to key regulations and regulatory guidance;
x
Updates on the status of significant corrective action plans;
x
Significant changes in the business including structural and
product changes;
x
Significant political, legislative and news events within the
mortgage industry;
x
Significant Compliance initiatives planned or in process;
x
Results of risk assessment, including key risks and emerging
risks; and
x
Trending information on customer complaints received.
Identification of significant issues and events, as well as significant
emerging risks are reported to business, functional, and
Compliance management upon identification. The same information
may also be included in additional weekly, monthly, and quarterly
reporting that is distributed to wider audiences.
c. Escalation to the Compliance Department: All Covered Business
Unit employees must observe established Citi escalation protocols
to apprise Mortgage Product Compliance or other control function
staff of significant regulatory and compliance related events in a
timely manner, including but not limited to:
x
Systemic breaks;
x
Suspected violations of policy, laws, regulations, etc.;
x
Suspicious transactions;
x
Errors in customer documentation, disclosures or processes;
x
Law enforcement or regulatory inquiries;
x
Privacy or information security breaches; and
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x
Customer complaints.
3.10 ISSUE TRACKING AND REMEDIATION
Compliance issues are identified through a variety of Program activities.
This includes management supervision, business unit monitoring,
Compliance monitoring, monitoring and testing conducted by Risk
Management QA and CER, regulatory examinations, ARR reviews,
exception or event reporting and complaint analyses. Compliance issues,
depending on the severity, are tracked in a firm-wide issue tracking system
(iCAPs), which facilitates:
x
A central repository to manage mortgage related Issues and CAPs;
and
x
Transparent and consistent approach to identifying and managing
Mortgage Servicing related risk and issues.
Compliance monitors compliance issues until remediation is completed by
periodically reviewing updates from the action plan owner. Compliance
must sign off prior to the issue being closed in the iCAPs system.
Corrective action associated with supervisory guidance or exams must be
validated prior to issue closure.
3.11 CHANGE CONTROL
Covered Business Units shall have a change management process that
addresses implementation of regulatory changes, changes in policies and
procedure, and business process changes 1 . The change control process
shall be consistent with Citi's overall change management framework.
Within this framework, Compliance is engaged in the review and approval
of all change control requests and supporting implementation plans. The
framework also requires a validation process to confirm the effectiveness of
the change. For additional information on the Regulatory Change
Management process, refer to Section 3.3 of this Program
1
The following changes are subject to the Change Management process: legal or regulatory requirement changes;
issues and processes related to regulatory examinations; policy and procedure changes; significant changes to O&T that
impact customer transactions; delegation of authority changes; technical coding changes (e.g., MIS reports);
communications with clients (e.g., marketing, disclosure materials, etc.); mergers, acquisitions, or divestitures; any
other change or planned action that impacts Mortgage Servicing Activities.
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3.12 COMPLAINT MANAGEMENT
The Covered Business Units will maintain protocols for management,
response and escalation of consumer complaints, including at a minimum
the following:
x
Escalation processes to facilitate rapid resolution of complaints to
avoid consumer harm, including fast-tracking of foreclosure-related
complaints;
x
Processes to forward to Compliance all regulatory complaints and
complaints alleging fair lending or other compliance concerns
x
Standards for complaint management, including response time;
x
Monthly complaint tracking reports, as available, are to be consulted to
identify areas within Mortgage and Default Servicing that have
potential regulatory exposures. Based upon the tracking reports,
Compliance determines whether exploratory or deep dive testing
should be performed. Compliance prepares and analyzes customer
complaint trend reports to aid in identifying potential areas of concern
and periodically performs root cause analysis of high risk complaint
categories; and
x
Distribution of MIS to management and oversight committees as
appropriate.
Compliance maintains processes to monitor and track customer complaints
to ensure that all complaints forwarded by regulatory bodies are handled
expeditiously and any compliance issues raised in complaints are reviewed,
appropriately responded to, and any necessary corrective actions are
initiated. This includes all complaints received from state or federal
regulatory agencies or any complaints that may raise a compliance or
regulatory issue.
3.13 COMPLIANCE STAFFING MANAGEMENT
Compliance periodically assesses its staffing models in order to be
consistent and follow the structure of how capacity is managed across the
organization; ensure that the governance that clearly defines required
approvals and escalation processes for timely resolution of capacity related
disputes is observed; establish the appropriate level of cross-functional
vetting to ensure capacity is continually aligned with the business strategy
and the results of risk assessments; reinforce the discipline of ongoing
capacity assessments to anticipate instead of react to resource needs; and
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to establish clear roles and responsibilities related to the management and
building of capacity.
To ensure effective coverage, the staffing review must include the following:
x
Organization Structure and Alignment;
x
Extent of Managerial Resources and their Qualifications;
x
Staffing Levels and Capacity Plans;
x
Roles & Responsibilities of Staff;
x
Skills & Competencies;
x
Training and Development Plans/Tools;
x
Talent Management Review;
x
Performance Management;
x
Compensation; and
x
Process for Monitoring & Management.
3.14 THIRD-PARTY OVERSIGHT AND COMPLIANCE
All Citi businesses must adhere to the firm’s Supplier Selection and
Management Policy (SSMP). The SSMP establishes common standards for
the selection, risk assessment, and ongoing management of third party
providers (TPP). The SSMP sets forth the requirements of the Citi
Approved Supplier Program (CASP), requires standard and consistent
contract provisions, and facilitates compliance with Citi’s Code of Conduct,
applicable Citi policies, and regulatory guidance (e.g., OCC Bulletin 200147, the FFIEC Outsourcing Technology Services Booklet, and the Federal
Reserve Supervisory Letter SR 00-4).
i. Monitoring and Testing: A key component of the TPP program is
ongoing monitoring and quality assurance measures. Centralized
management control testing is performed on a quarterly basis by an
established Centralized Testing Unit (CTU) for Supplier Management.
The CTU is managed by the Citi Operations & Technology Risk
Management Unit who is responsible for the oversight of program level
Supplier Management Testing. The scope and nature of monitoring and
testing is based on risk classification. Results of this testing are
distributed to all businesses and self assessment entities and entered in
the firm’s centralized issue and tracking system (iCAPs) for issues
escalation and reporting.
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Where affiliated or non-affiliated TPPs perform duties as agents of Citi,
this Program applies to their activities. The Compliance Department is
responsible for incorporating standards that require relevant monitoring
and testing to include coverage of vendor's regulatory compliance
performance; that business relationship owners are properly trained to
provide vendor regulatory compliance oversight; and that policies and
training materials are appropriately disseminated.
ii. Specialized Oversight: Specialized oversight programs, with clear Citi
ownership and reporting accountability to the REOSC, must be
maintained for law firms, third party servicers/subservicers and other
specialized service providers as may be determined from time to time by
the REOSC. Compliance will ensure that Business Vendor Relationship
Managers ensure that each third-party receives appropriate regulatory
compliance training. Key aspects of the law firm program include
supplemental onboarding requirements, onsite reviews, and ongoing
monitoring and oversight. Please refer to the "Legal Department
Mortgage Law Firm Policies and Procedures" for more details.
3.15 ONGOING PROGRAM DOCUMENTATION: THE REGULATORY REQUIREMENTS
MATRIX (RRM):
Citi Global Compliance has established the RRM as a tool to capture and
document, in a single format: (i) the key laws, rules, regulations and related
Citi policies; (ii) an estimation of compliance risk associated with each of
these (high, medium, low); (iii) the related key controls relied on to mitigate
these risks; (iv) the frequency of testing based on risk estimation; and (v)
the relevant business(es)/product(s) to which the matrix item applies. The
RRM includes, as appropriate, a detailed description of state-specific
regulations and requirements as they pertain to Mortgage Servicing. There
may be one or more key controls for a requirement, and they may take
various forms, including but not limited to: policies, procedures, testing,
automated system blocks, maker/checker reviews, certifications, training,
exception reporting, and monitoring. RRMs are maintained and updated
for key regulatory requirements by Compliance and CER as required by
global policy.
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4 MORTGAGE SERVICING COMPLIANCE PROGRAM ROLES AND
RESPONSIBILITIES
4.1
MORTGAGE PRODUCT COMPLIANCE
Mortgage Product Compliance (MPC) provides advice, guidance and
support to the Covered Business Units to assist these businesses effectively
manage the compliance risk inherent in their operations. The MPC Director
is responsible for maintaining this Compliance Program document. The
Program shall be updated as necessary and reviewed by Compliance at
least annually. Material changes to the Program must be reviewed and
approved in the manner set forth in Program Governance, Section 2 of the
Program.
Specific responsibilities of the MPC Director and the MPC Department
include:
x
Establishing Mortgage Servicing compliance risk management standards
and processes that enable management to proactively identify, measure,
assess, monitor, test and report Mortgage Servicing compliance risks;
x
Establishing and documenting the Mortgage Servicing compliance roles
and responsibilities of Business Managers, Employees, Compliance and
other Control Functions, including CER;
x
Maintaining independent monitoring, and issue tracking and corrective
action/resolution processes in accordance with this Program;
o Overseeing/Conducting an annual Mortgage Servicing Compliance
Risk Assessment, with interim updates, as part of the overall Global
Compliance compliance risk assessment process;
x
Developing an Annual Compliance Plan at the direction of Global
Compliance that includes key Mortgage Servicing compliance initiatives,
projects and activities;
x
Reviewing and approving independent testing plans developed by CER;
x
Communicating/Reporting the results of its monitoring and other
oversight activities to Global Compliance management, business
management and management and Board oversight committees set up
under this Program per agreed upon schedules;
x
Managing the RRI and RRM processes for Mortgage Servicing, in
conjunction with Legal and CER;
x
Maintaining escalation protocols to senior management and appropriate
committees for any significant and emergent issues;
x
Advising Covered Business Units on the development and maintenance
of compliance training programs. MPC's compliance training roles
include:
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o Participation in Covered Business Unit's annual training needs
assessment and training plan development process:
o Ongoing review and approval of new or changing training materials;
o Development of training content for key regulatory compliance
training programs;
o Monitoring business performance against delivery and attendance
of training as required and within prescribed timeframes;
o Recommending training enhancements to address issues found
through oversight reviews;
o Overseeing and confirming revision of applicable training to reflect
changes in the regulatory environment; and
o Participating in Compliance training as required to enhance and
maintain expertise level.
4.2
x
Overseeing Mortgage Servicing business lines in their development,
implementation and monitoring of compliance policies, procedures and
controls to meet their compliance obligations (for ongoing operations,
and for new products or business strategies, initiatives and projects);
x
Assisting Mortgage Servicing business line management in assessing
the impact of changes in regulations and business operations on the
compliance risks and controls affecting their businesses;
x
Participating on Oversight Committees which review and determine
actions necessary to implement new or changed regulatory requirements
based on Legal's summary;
x
Overseeing periodic Mortgage Servicing compliance staffing
assessments and development of Mortgage Servicing compliance
resource plans; and
x
Monitoring and tracking customer complaints to ensure complaints are
handled expeditiously and any compliance issues raised in complaints
are appropriately responded to and necessary corrective actions are
initiated.
BUSINESS MANAGERS
Covered Business Units retain risk ownership and manage the risks
originating from their business. As the "first line of defense", businesses
therefore must establish effective compliance policies, procedures and
controls into their business delivery and operations functions.
Duties and responsibilities include:
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x
Maintaining an understanding of the compliance risks applicable to the
business;
x
Establishing the business unit culture of compliance through enforcing
business compliance accountability, communicating the importance of
behavior consistent with the highest ethical standards, and ensuring that
every employee recognizes and is held accountable for his/her
compliance responsibilities;
x
Developing and maintaining compliance policies, procedures, system
and other controls in consultation with Mortgage Compliance
department;
x
Developing, monitoring, and executing action plans to implement new or
changed regulatory requirements;
x
Overseeing an ongoing risk based compliance monitoring and testing
program (including control self assessments, KRIs and other programs)
to verify the adequacy of controls to mitigate compliance risk;
x
Developing and implementing corrective actions resulting from issues
generated by business unit level testing / monitoring, and testing /
monitoring conducted by independent Control functions (including
Compliance, Risk Management QA and ARR) and Regulatory
Examinations;
x
Ensuring sufficient resources - staffing and budget - to design and
operate compliance controls and execute compliance-related action
plans;
x
Incorporating compliance risk considerations into business unit strategy,
including significant new initiatives;
x
Reviewing Mortgage Servicing compliance reports from MPC;
x
Incorporating compliance risk considerations into annual performance
management processes and balanced scorecard criteria;
x
Maintaining a comprehensive compliance training program in
accordance with this Compliance Program including ensuring that
employees receive training on all applicable compliance requirements;
x
Ensuring all Covered Business Unit employees must observe
established Citi escalation protocols to apprise Mortgage Product
Compliance or other control function staff of significant regulatory and
compliance related events in a timely manner; and
x
Maintaining protocols for management, response and escalation of
consumer complaints, including at a minimum the following:
o Escalation processes to facilitate rapid resolution of complaints to
avoid consumer harm, including fast-tracking of foreclosure-related
complaints;
o Standards for complaint management, including response time;
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o Executive Response Unit (ERU) Complaints Analysis: Monthly
complaint tracking reports issued by the ERU are to be utilized to
identify potential areas within Mortgage and Default Servicing that
have potential regulatory exposures.
4.3
LEGAL
Citi Legal manages the legal risk of Citi and supports the risk and control
functions in their management of risks. Citi Legal's duties and
responsibilities include:
x
Providing legal advice to the Compliance and business units on
regulatory compliance matters;
x
Monitoring and tracking new and changed laws, regulations, and
supervisory guidance;
x
Facilitating the Regulatory Change Management process by assuring
timely receipt and notification to internal parties of changes to federal law
and regulations, state law requirements, banks supervisory guidance,,
directives issued by Fannie Mae, Freddie Mac, FHA, and VA and any
MERs rules;
o For new or changed regulatory requirements, Legal prepares a
summary overview of the new or changed requirements, identifies
businesses impacted, and the effective date of the new
requirements;
x
Participating on Oversight Committees which review and determine
actions necessary to implement new or changed regulatory requirements
based on Legal's summary;
x
Reviewing and approving the regulatory requirements contained in RRI
annually;
o Working with outside counsel to maintain inventories of applicable
state and local requirements;
x
Assessing legislative, judicial, and regulatory activities and
developments to identify potential emerging compliance risks and
developments;
x
In conjunction with MPC:
o Advising business managers on new or changed compliance
requirements and potential impacts;
o Advising business managers on compliance and legal risks
associated with certain business decisions; and
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x
4.4
Providing information to business managers and Compliance regarding
litigation matters that may involve Citi or other market participants and
may have a regulatory compliance impact on Citi.
CONTROL AND EMERGING RISK (CER)
Citi Control and Emerging Risk (CER) manages independent regulatory
compliance testing plans and provides business with guidance on the
management of the control environment. CER's duties and responsibilities
include:
x
Conducting independent testing of key regulatory risks as part of the
Compliance Monitoring and Testing Program;
o Partners with compliance to develop and maintain the test plan;
o Staffs the testing function with relevant subject matter expertise and
knowledge; and
o Leverages data mining and analysis to discover defects.
x
Overseeing control self-assessment programs;
o Provides guidance and standards for assessment of controls; and
o Supports systems and technology for consistent reporting of control
assessments.
x
Supporting Business Risk Control Committees programs and
governance;
o Establishes guidance on the coverage and conduct of meetings
and content.
x
Reporting, tracking and promoting the prompt resolution of issues and
corrective actions;
x
Providing business and operations with guidance on the development of
effective controls;
o Establishes guidance on the use of the Regulatory Risk Matrix and
the evaluation of related controls and testing.
4.5
RISK MANAGEMENT QUALITY ASSURANCE
Risk Management Quality Assurance (QA) is an independent control unit
within the Default Servicing organization. Its primary function is to serve as
a key monitoring and reporting function focusing on quality performance for
critical default servicing activities. Risk Management QA duties and
responsibilities include:
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4.6
x
Maintaining independence of the QA practice from broader Mortgage
Servicing;
x
Developing the scope of Covered Business Units that are regularly
reviewed as part of the QA process;
x
Creating and conducting a Quality Review Process of these business
units;
x
Evaluating the ability of Mortgage Servicing to ensure fair and equitable
treatment of borrowers in conformance with all applicable standards;
x
Reporting findings, results, and feedback to Senior Management, Risk
Management, Default Servicing, Compliance, and Audit & Risk Review
(ARR);
x
Conducting ongoing monitoring of new and significantly changed
business practices;
x
Ensuring appropriate corrective actions, including enhancements and
additions to necessary training, are established when appropriate; and
x
Conducting subsequent analysis of corrective actions to determine the
effectiveness of actions implemented.
AUDIT AND RISK REVIEW
Audit and Risk Review (ARR) provides management and the Board with
independent and objective insights on important risks and the effectiveness
of the control environment. ARR's compliance-related duties and
responsibilities include:
x
Maintaining auditable universe of compliance risk entities which are riskbased and dynamically adjusted on topical issues, emerging risks and
new regulations;
x
Integrating compliance risk into ARR’s entity risk assessment to drive the
audit coverage for the year, which is periodically adjusted;
x
Executing compliance-related audit programs to ensure that risks in the
entities under review are appropriately identified, measured, monitored
and controlled;
x
Ensuring that the auditors performing compliance audits possess and
maintain required skill sets and knowledge of current regulatory
requirements;
x
Evaluating the design and operating effectiveness of the US Residential
Mortgage enterprise compliance programs and processes;
[Mortgage Servicing Compliance Program]
Citi Internal
Mortgage Servicing Compliance Program Roles and Responsibilities
Page 31 of 37
4.7
x
Identifying and reporting key control and risk management issues to
senior management and the Citigroup and Citibank Audit Committees;
and
x
Ensuring that effective actions are taken promptly to address control
vulnerabilities identified by management, ARR and regulators.
ALL EMPLOYEES
All employees must conduct Citi's business, as well as their own personal
activities, in accordance with Citi’s Code of Conduct, Citi policies, and all
applicable state and federal laws or regulations. Specific employee duties
and responsibilities relating to Mortgage Servicing include:
4.8
x
Following this Program and the related compliance policies and
procedures established by Compliance and Mortgage Servicing
business units;
x
Observing the escalation and reporting policies or processes in place
across Citigroup to escalate Mortgage Servicing issues;
x
Being knowledgeable of, and in compliance with, all regulatory and
compliance requirements, and related Citi policies and procedures that
are specifically related to their positions;
x
Understanding and managing all operational risks affecting their areas of
responsibility, including by maintaining adequate internal controls;
x
Asking questions or expressing concerns if the employee does not
understand their compliance role or responsibility;
x
Successfully completing all required compliance training;
x
Reporting on a timely basis any matters (whether involving themselves
or others) to their supervisor and their Compliance counterpart, that may
involve possible compliance breaches or violations; and
x
Reporting any violations or potential violations of Citi’s policies or Code
of Conduct to their manager or anonymously to the Citi Ethics Hotline.
HUMAN RESOURCES
Human Resources' compliance-related duties and responsibilities include:
x
Overseeing the annual performance review process and ensuring that
information and assessments regarding the compliance and regulatory
performance of key executives, is incorporated by executive
[Mortgage Servicing Compliance Program]
Citi Internal
Mortgage Servicing Compliance Program Roles and Responsibilities
Page 32 of 37
management in determining the annual performance management rating
and incentive compensation;
x
Liaising with MPC and business unit management to identify appropriate
compliance performance objectives;
x
Overseeing the Global Learning Management System (GLMS) to
document and monitor employee training fulfillment;
x
Overseeing, in consultation with MPC and Covered Business Units, the
completion of an annual compliance training needs assessment;
x
Overseeing the process to provide employees with certain training
notifications, including delinquent notifications for failing to meet training
requirements, with escalation to MPC and business line management;
x
Providing Covered Business Units and MPC with periodic training
reports, including any training exceptions;
x
Working with MPC and Covered Business Units in the development of
compliance training programs;
x
Supporting the delivery of compliance training; and
x
Overseeing and supporting the hiring of compliance resources.
[Mortgage Servicing Compliance Program]
Citi Internal
Mortgage Servicing Compliance Program Roles and Responsibilities
Page 33 of 37
APPENDIX A: DEFINITIONS
ARR - Audit and Risk Review
BRCC - Business Risk and Control Committee
CAMBRS - Citi Anti-Money Laundering Business Rule Standards
CAMSRA - Comprehensive Annual Mortgage Servicing Risk Assessment
CAPs - Corrective Actions Plans
CARA - Compliance Annual Risk Assessment
CASP - Citi Approved Supplier Program
CER - Controls and Enterprise Risk
CISS - Citi Information Security Standards
Citi - Citigroup, Inc. and its subsidiaries
Consent Orders - FRB and OCC Mortgage Servicing Consent Orders, dated
April 13, 2011
CMAC - Capital Markets Product Approval Committee
Covered Business Units - For the purposes of this document, includes U.S
Residential Mortgage Servicers
CPAC - Consumer Product Approval Committee
CSS - Citi Shared Services
CSSMP - Citi Supplier Selection and Management Policy
CTU - Central Testing Unit (for supplier management)
GLMS - Global Learning Management System
Global Policy - For purposes of this document, refers to the Global Compliance
Control Policy
HR - Human Resources
iCAPS - Citi centralized issue and tracking system
KRI - Key Risk Indicator
[Mortgage Servicing Compliance Program]
Citi Internal
Appendix A: Definitions
Page 34 of 37
MPC Director - Director of Mortgage Product Compliance
MCC - Mortgage Compliance Committee
Mortgage Servicing Activities - U.S. residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities
OSP - Outsource Service Provider
QA - Quality Assurance
QC - Quality Control
Program - Mortgage Servicing Compliance Program
REOSC - Real Estate Operations Steering Committee
RRI - Regulatory Requirements Inventory
RRM - Regulatory Risk Matrix
SME - Compliance Subject Matter Expert
TPISA - Third Party Information Security Assessment
[Mortgage Servicing Compliance Program]
Citi Internal
Appendix A: Definitions
Page 35 of 37
APPENDIX B: SUPPORTING COMPLIANCE PROGRAMS/POLICIES
Compliance has developed separate policy/program documents (programs) to
address certain significant requirements that are applicable to Citi on a firm-wide
basis. These requirements-based compliance programs are intended to
complement the Mortgage Servicing Compliance Program and are designed to
enable Citi to manage and mitigate the risks associated with certain higher-risk
regulatory requirements. The programs outline the scope, purpose, and key
compliance processes in place to manage, mitigate and oversee the risk
associated with these regulatory compliance requirements. The programs
include the following:
Fair Lending: - Citi has adopted the U.S. Fair Lending Policy and accompanying
U.S. Fair Lending Standards (“Standards”) in order to do business without bias or
reliance on stereotypes, comply with laws and regulations that prohibit
discrimination in lending, and maintain a reputation for fairness. The Corporate
Fair Lending Director is primarily responsible for coordinating and overseeing
Citi’s Fair Lending Program. At a business level, Citi has implemented and
maintained a Business Fair Lending Program consistent with the U.S. Fair
Lending Standards and all applicable fair lending laws and regulations. Each
Business has a Business Fair Lending Officer to oversee the Business’s Fair
Lending Program, and shall allocate sufficient resources to ensure effective fair
lending compliance and risk management. The Business Fair Lending Officer’s
responsibilities include conducting a periodic Fair Lending Risk Assessment of
the Business; chairing any Business-Level Fair Lending Committee; reviewing
current and proposed Business policies and procedures for fair lending impact;
directing Business-Level fair lending testing and monitoring; and managing fair
lending reviews and examinations.
Anti-Money Laundering (AML): - All Citi employees are expected to be vigilant in
the fight against financial crime and must not allow Citi to be used for money
laundering, terrorist financing activities, or other criminal activity. Citi’s Board of
Directors has designated a Global AML Compliance Officer or the Global Head,
AML & Sanctions Compliance responsible for coordinating and managing Citi’s
AML Compliance Program, reviewing Citi’s adherence to applicable laws and
regulations, and apprising the Board of Directors and senior management of AML
compliance initiatives, any significant compliance deficiencies, and the reporting
of suspicious activity in the United States. At a business level, the AML
Compliance Program includes a description of the AML Compliance structure,
including a description of roles and responsibilities for Compliance and the
business; a provision requiring the designation and certification of an AML; a
Compliance Officer (AMLCO) assigned to a particular country or business who is
responsible for coordinating, monitoring, testing, and where appropriate,
supervising day-to-day compliance with the Global AML Global Anti-Money
Laundering Policy.
[Mortgage Servicing Compliance Program]
Citi Internal
Appendix B: Supporting Compliance Programs/Policies
Page 36 of 37
Privacy: - Citi’s Consumer Privacy Program’s goal and priority is to maintain
customer’s trust and confidence when handling their personal information. Citi
protects this information by maintaining physical, electronic, and procedural
safeguards that meet or exceed applicable law. Employees are trained in the
proper handling of personal information and when third parties are used to
provide a service for Citi, they must protect the confidentiality of personal
information they receive.
[Mortgage Servicing Compliance Program]
Citi Internal
Appendix B: Supporting Compliance Programs/Policies
Page 37 of 37
Appendix 3 –
FRB Consent Order Action Plan
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 1
CONFIDENTIAL - NOT FOR DISTRIBUTION
Tuesday, July 12, 2011
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. § 261.14(a)(4), 261.14(a)(8)
SUBMITTED SUBJECT TO 12 U.S.C. § 1828(X)
Federal Reserve Board
Consent Order Action Plan
Federal Reserve Board Consent Order Action Plan
As of 7/12/2011
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Legal
Completed
5/27/2011
Independent Risk
Completed
5/28/2011
Legal
Completed
6/6/2011
Independent Risk / Legal
Completed
6/10/2011
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Paragraph 1 - Source of Strength
Paragraph 1 - The board of directors of Citigroup shall
take appropriate steps to fully utilize Citigroup's financial
and managerial resources, pursuant to section 225.4(a)
of Regulation Y of the Board of Governors (12 C.F.R. §
Source of Strength
225.4(a)), to serve as a source of strength to the Bank,
including but not limited to, taking steps to ensure that
the Bank complies with the Consent Order issued by the
OCC regarding the Bank's residential mortgage loan
servicing activities.
The Order
Workplan
1.1
Draft Board Resolution declaring Citigroup's support for Citibank
1.2
Review draft Board Resolution
1.3
Submit to Citigroup Board for approval and adoption
1.4
Obtain Citigroup Board approval of Source of Strength resolution
1.5
Submit resolution of Citigroup Board to the FRB
Submission Ref
Task
Paragraph 2 - Board Oversight
Board Oversight
Plan
Paragraph 2 - Within 60 days of this Order, the board of
directors of Citigroup shall submit to the Reserve Bank a
written plan to strengthen the board's oversight of
Citigroup's enterprise-wide risk management ("ERM"),
internal audit, and compliance programs concerning the
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities conducted through Citi Mortgage or
CitiFinancial. The plan shall, at a minimum, address,
consider, and include: [see paragraph 2, a-d]
The Order
Structure and
Oversight
2.1
Draft Citigroup Board Oversight plan
Independent Risk / Legal
Completed
5/20/2011
2.2
Review Plan and confirm alignment with Consent Order requirements
Independent Risk / Legal
Completed
5/27/2011
2.3
Submit for approval under Deliverable Submission Review Process
Independent Risk / Legal
Completed
6/1/2011
2.4
Submit to Citigroup Board for approval
Legal
Completed
6/6/2011
2.5
Submit Citigroup Board Oversight Plan to the FRB
Legal
Completed
6/13/2011
2.6
Amend charter for Executive Steering Committee
Independent Risk / Legal
Completed
6/30/2011
2.7
Develop framework to assess Citigroup Board committee charters and resolutions against FRB Consent Order requirements
Independent Risk
Completed
5/3/2011
2.8
Identify and inventory existing Citigroup Board committee charters and resolutions with responsibility for risk & governance
functions
Independent Risk
Completed
5/6/2011
2.9
Assess Citigroup Board committee charters and resolutions for gaps against the Consent Order requirements
Independent Risk
Completed
5/6/2011
2.10
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/18/2011
2.11
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2.12
Draft amendments to existing charters and resolutions, or draft new charters and resolutions as needed
Legal
Completed
5/27/2011
2.13
Submit resolutions for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/1/2011
2.14
Submit resolutions to Citigroup Board for approval
Legal
Completed
6/6/2011
2.15
Submit approved resolutions to the FRB
Legal
Completed
6/13/2011
2.16
Establish Citigroup Mortgage Compliance Committee (Citigroup MCC)
Board
Completed
4/11/2011
Compliance
Committee
2.17
Revise Citigroup MCC Board resolution
Board
Completed
5/27/2011
2.18
Create new resolution as required for Citigroup MCC
Board
Completed
5/27/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 2
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
2a.1
Paragraph 2 (a) - Policies to be adopted by the board of
directors that are designed to ensure that the ERM
program provides proper risk management with respect
Risk Management
to CitiMortgage's and CitiFinancial's residential mortgage
and Operational
loan servicing, Loss Mitigation, and foreclosure activities,
Risk Policies
particularly with respect to compliance with Legal
Requirements, and supervisory standards and guidelines
as they develop
The Order
Paragraph 2 (b) - Policies and procedures to ensure that
the ERM program provides proper risk management of
independent contractors, consulting firms, law firms, or
other third parties who are engaged to support
residential mortgage loan servicing, Loss Mitigation, or
foreclosure activities or operations, including their
compliance with the Legal Requirements and Citigroup's
internal policies and procedures, consistent with
supervisory guidance of the Board of Governors
The Order
Workplan
Citi Supplier
Selection and
Management
Policies
Workplan
Paragraph 2 (c) - Steps to ensure that Citigroup's ERM,
audit, and compliance programs have adequate levels
and types of officers and staff dedicated to overseeing
CitiMortgage's and CitiFinancial's residential mortgage
Staffing Adequacy
loan servicing, Loss Mitigation, and foreclosure activities,
as applicable, and that these programs have officers and
staff with the requisite qualifications, skills, and ability to
comply with the requirements of this Order
The Order
Workplan
Task
Develop framework to evaluate risk management policies against Consent Order requirements at Citigroup Board level
As of 7/12/2011
Functional Lead
Status
Due Date
Independent Risk
Completed
5/6/2011
2a.2
Identify and inventory existing risk management policies at Citigroup Board level
Independent Risk
Completed
5/9/2011
2a.3
Assess existing risk management policies against the Consent Order requirements at Citigroup Board level
Independent Risk
Completed
5/13/2011
2a.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2a.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2a.6
Draft amendments to existing risk management policies, or draft new policies as needed
Independent Risk
Completed
6/30/2011
2a.7
Submit for approval under Deliverable Submission Review Process
Independent Risk
In Progress
7/20/2011
2a.8
Submit to the Risk Policy Coordination group
Independent Risk
Not Started
7/19/2011
2a.9
Submit Mortgage Servicing Oversight Policy to the Citigroup Board for approval and adoption
Independent Risk
Not Started
8/9/2011
2a.10
Provide amended and/or new policies to FRB in progress report, if required
Legal
Not Started
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
2b.1
Develop framework to evaluate policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/6/2011
2b.2
Identify and inventory existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/9/2011
2b.3
Assess existing policies governing Third Party vendors against Consent Order requirements
Independent Risk
Completed
5/13/2011
2b.4
Review and discuss identified gaps with relevant stakeholders and owners
Independent Risk
Completed
5/20/2011
2b.5
Agree on gap remediation with relevant stakeholders and owners
Independent Risk
Completed
5/23/2011
2b.6
Draft amendments to existing policies governing Third Party vendors, or draft new policies as needed
Operations & Technology
Completed
6/6/2011
2b.7
Submit amendments for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/6/2011
2b.8
Submit amendments to the Citi Policy Committee for approval, as required
Independent Risk
Completed
6/8/2011
2b.9
Submit amended policy to the Citigroup Board for review
Independent Risk
Completed
6/10/2011
2b.10
Submit relevant policies to the FRB
Legal
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
2c.1
Develop framework to evaluate staffing adequacy against Consent Order requirements
Human Resources
Completed
5/16/2011
2c.2
Communicate the Staffing Adequacy Framework to Covered Business Units
Human Resources
Completed
5/16/2011
2c.3
Assess Covered Business Units for gaps using Staffing Adequacy Framework
Human Resources
Completed
6/30/2011
2c.4
Review and discuss identified gaps with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.5
Develop staffing gap remediation with relevant stakeholders and owners
Human Resources
Completed
6/30/2011
2c.6
Develop enhanced staffing plan based on gaps
Human Resources
Completed
6/30/2011
2c.7
Submit staffing plan for approval under Deliverable Submission Review Process
Human Resources
Not Started
7/22/2011
2c.8
Develop staffing adequacy metrics
Human Resources
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 3
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 2 (d) - Steps to improve the information and
reports that will be regularly reviewed by the board of
directors or authorized committee of the board of
dire+A109ctors regarding residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities and
operations, including, compliance risk assessments, and
the status and results of measures taken, or to be taken,
to remediate deficiencies in residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities, and
to comply with this Order
The Order
Workplan
Board Monitoring
MIS and
Remediation
Tracking
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
2d.1
Identify MIS Objectives for Board Mortgage Servicing Information Package, against key areas covered in the Consent Order
requirements
Independent Risk
Completed
5/9/2011
2d.2
Design Board Mortgage Servicing Information Package
Independent Risk
Completed
5/13/2011
2d.3
Review requirements with data producers for metrics feasibility and generation
Independent Risk
Completed
5/20/2011
2d.4
Determine required systems and technology to produce Board Mortgage Servicing Information Package
Technology
Completed
5/20/2011
2d.5
Validate enhanced Board Mortgage Servicing Information Package sample with key users and Executive Sponsor
Independent Risk
Completed
5/27/2011
2d.6
Produce enhanced sample of Board Mortgage Servicing Information Package with metrics
Independent Risk
Completed
6/20/2011
2d.7
Submit Board Mortgage Servicing Information Package for approval under Deliverable Submission Review Process
Independent Risk
Completed
6/27/2011
2d.8
Integrate Citigroup MCC's feedback into the Board Mortgage Servicing Information Package
Independent Risk
Not Started
7/15/2011
2d.9
Include Board Mortgage Servicing Information Package in first Board status report
Independent Risk
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Due Date
Paragraph 3 - Risk Management
Paragraph 3 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its ERM program with respect to its
oversight of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations. The
Risk Management
enhanced program shall be based on an evaluation of
the effectiveness of Citigroup's current ERM program in
the areas of residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities and operations, and
recommendations to strengthen the risk management
program in these areas.
The Order
Workplan
Risk Management
Organization
Paragraph 3 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the fundamental elements
of the risk management program and any enhancements
or revisions thereto, including a comprehensive annual
risk assessment, encompass residential mortgage loan
servicing, Loss Mitigation, and foreclosure activities;
The Order
Committee
Structure
Workplan
3.1
Conduct an evaluation of the effectiveness of CitiGroup's current risk management program for Mortgage Servicing Activities
to identify enhancements needed
In Business Risk
Completed
6/10/2011
3.2
Report the recommended enhancements to the Executive Steering Committee (ESC)
In Business Risk
Completed
6/10/2011
3.3
Develop an action plan to enhance risk management for Mortgage Servicing Activities based on the findings of the
effectiveness evaluation
In Business Risk
Completed
6/10/2011
3.4
Verify that ICG has sold (to 3rd party) or transferred to CMI any loans where Citi owns the servicing rights
In Business Risk
Not Started
9/10/2011
3.5
Establish process to ensure that on an ongoing basis any loans that are purchased by ICG where Citi owns the servicing rights
are either sold (to 3rd party) or transferred to CMI within 90 days of purchase
In Business Risk
In Progress
8/3/2011
3.6
Submit the action plan for approval through the Deliverable Submission Review Process
In Business Risk
Completed
6/6/2011
3.7
Submit the action plan to the FRB
Legal
Completed
6/13/2011
3.8
Implement the action plan
Independent Risk
In Progress
8/11/2011
Functional Lead
Status
Due
Independent Risk
Completed
6/6/2011
Submission Ref
Task
3a.1
Appoint a Consumer Mortgage Specialist in Independent Risk
3a.2
Ensure that an In-Business SORM is identified or hired for the U.S. mortgage servicing businesses
Operational Risk
Management
Completed
7/1/2011
3a.3
Ensure Head of Mortgage O&T, CitiMortgage Chief Customer Officer, and CitiMortgage Chief Legal Counsel are identified or
hired
CitiMortgage Risk
Completed
6/10/2011
3a.4
Draft new or enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk
Committees, and the NA Consumer Risk Committee
In Business Risk
Completed
6/17/2011
3a.5
Refine enhanced charters and mandates for the ESC, REOSC, Operational Risk Committee, in-business Risk Committees,
and the NA Consumer Risk Committee
In Business Risk
Completed
7/1/2011
3a.6
Submit enhanced ESC mandate and charter to for approval, pursuant to the Deliverable Submission Review Process
CitiMortgage Risk
Not Started
7/15/2011
3a.7
Obtain ESC mandate and charter approval
CitiMortgage Risk
Not Started
8/11/2011
3a.8
Submit enhanced NA Consumer Risk Committee mandate and charter for approval, pursuant to the Deliverable Submission
Review Process
Independent Risk
Not Started
7/15/2011
Independent Risk
Not Started
8/11/2011
In Business Risk
Not Started
7/15/2011
In Business Risk
Not Started
8/11/2011
Functional Lead
Status
Due
3a.9
Obtain NA Consumer Risk Committee mandate and charter approval from Citi CRO
3a.10
Submit enhanced REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters to ESC for approval, pursuant
to the Deliverable Submission Review Process
3a.11
Obtain REOSC, CitiMortgage, CitiFinancial, and Private Bank mandates and charters approval from ESC
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 4
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Staffing Oversight
3a.12
Refine enhancements to staffing adequacy and capacity plan oversight procedures
3a.13
Mortgage
Servicing
Operational
Procedures
Controls, Metrics
and Accountability
Paragraph 3 (a) Continued - The plan shall, at a
minimum, be designed to: (a) Ensure that the
fundamental elements of the risk management program
and any enhancements or revisions thereto, including a
comprehensive annual risk assessment, encompass
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities;
Third Party
Oversight
Change Control
Review and
Approval Process
Comprehensive
Annual Mortgage
Servicing Risk
Assessment
Process
Risk Management
Reports
The Order
Task
As of 7/12/2011
Functional Lead
Status
Due Date
In Business Risk
In Progress
7/31/2011
Create enhanced operational procedures and define new preventive controls for Mortgage Servicing Activities to prevent
service errors
Operations
In Progress
7/15/2011
3a.14
Draft enhancements for default management procedures, including customer communications (e.g., by implementing a single
point of contact), document management, loan modification, foreclosure and bankruptcy processing to improve process and
service quality
Operations
In Progress
7/15/2011
3a.15
Refine enhanced operational procedures
Operations
In Progress
7/31/2011
3a.16
Ensure enhanced operational procedures for key processes are in place
In Business Risk
Not Started
8/11/2011
3a.17
Identify key operational risk breakpoints and metrics
In Business Risk
Completed
7/1/2011
3a.18
Enhance controls for key operational risk or customer service breakpoints
In Business Risk
In Progress
8/11/2011
3a.19
Determine systems and technology enhancements in order to augment the enhanced operational risk controls
In Business Risk
In Progress
8/11/2011
3a.20
Validate QA approach and methodology for key breakpoints
Independent Risk
Not Started
7/15/2011
3a.21
Approve foreclosure law firms management framework, policies, and procedures
In Business Risk
Completed
6/10/2011
3a.22
Approve the third party management framework, policies and procedures
In Business Risk
Completed
6/12/2011
3a.23
Ensure In Business Risk involvement in the change control process (Section 3.3 of the Mortgage Servicing Compliance
Program) for significant process and systems changes
In Business Risk
In Progress
8/11/2011
3a.24
Develop draft methodology for conducting the Comprehensive Annual Mortgage Servicing Risk Assessment ("CAMSRA")
CitiMortgage Risk
Completed
6/2/2011
3a.25
Define role of Independent Risk in CAMSRA
Independent Risk
Completed
6/9/2011
3a.26
Finalize methodology for CAMSRA
CitiMortgage Risk
In Progress
7/25/2011
3a.27
Approve methodology for CAMSRA
In Business Risk
Not Started
8/11/2011
3a.28
Determine required enhancements to risk management reports and MIS for board ("MCC Operational Risk Dashboard"), and
senior management ("Executive Operational Risk Dashboard")
In Business Risk
In Progress
7/31/2011
3a.29
Determine systems and technology enhancements in order to augment the enhanced process and service quality
management reports
In Business Risk /
Technology
In Progress
8/11/2011
3a.30
Ensure risk management dashboards and MIS for board, senior management are in place
In Business Risk
Not Started
8/11/2011
Triggers for Key
Potential
Operating
Breakpoints
3a.31
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3a.32
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3a.33
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 5
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Compliance Risk
Paragraph 3 (b) - The plan shall, at a minimum, be
Management
Programs and
designed to (b) ensure that the risk management
Oversight at Large
program complies with supervisory guidance of the
Banking
Board of Governors, including, but not limited to, the
Organizations with
guidance entitled, "Compliance Risk Management
Complex
Programs and Oversight at Large Banking Organizations
Compliance
with Complex Compliance Profiles," dated October 16,
Profiles
2008 (SR 08-08/CA 08-11); and
(Also MRA 3, 5, 6)
The Order
Paragraph 3 (c) - The plan shall, at a minimum, be
designed to (c) establish limits for compliance, legal, and
reputational risks and provide for regular review of risk
limits by appropriate senior management and the board
of directors or authorized committee of the board of
directors.
The Order
Workplan
Process Risk
Indicators
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
3b.1
Ensure plan is in compliance with the guidance entitled “Rating the Adequacy of Risk Management Processes and Internal
Controls at State Member Banks and Bank Holding Companies” (SR 95-51 (SUP))
In Business Risk
Completed
6/10/2011
3b.2
Conduct an assessment of the ERM plan for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities
against the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with
Complex Compliance Profile," (SR 08-08/CA 08-11)
Independent Risk
Completed
6/13/2011
Functional Lead
Status
Due
Submission Ref
Task
3c.1
Establish process risk indicators (tolerance threshold) that will serve as early indicators of potential problems
In Business Risk
In Progress
7/15/2011
3c.2
Approve process risk indicators (tolerance threshold)
Independent Risk
Not Started
8/5/2011
3c.3
Ensure process risk indicators (tolerance threshold) are in place
In Business Risk
Not Started
8/11/2011
3c.4
Enhance reporting formats and reporting procedures to perform periodic reporting of loss norm variances for CMI to senior
management and the Board
Operational Risk
Management
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
Paragraph 4 - Compliance Program
Paragraph 4 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance its enterprise-wide compliance program
("ECP") with respect to its oversight of residential
mortgage loan servicing, Loss Mitigation, and foreclosure Enhanced ECP
Program
activities and operations. The enhanced program shall
(Also MRA 3, 5, 6)
be based on an evaluation of the effectiveness of
Citigroup's current ECP in the areas of residential
mortgage loan servicing, Loss Mitigation, and foreclosure
activities and operations, and recommendations to
strengthen the ECP in these areas.
The Order
Workplan
4.1
Conduct an assessment of the ECP for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities against
the guidance entitled "Compliance Risk Management Programs and Oversight at large Banking Organizations with Complex
Compliance Profile," (SR 08-08/CA 08-11)
Compliance
Completed
6/13/2011
4.2
Develop an action plan to enhance the ECP, based on the findings of the effectiveness evaluation
Compliance
Completed
6/13/2011
4.3
Submit for approval under Deliverable Submission review Process
Compliance
Completed
6/13/2011
4.4
Submit the action plan to enhance ECP to the FRB
Legal
Completed
6/13/2011
4.4
Implement the action plan
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 6
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Paragraph 4 (a) - The plan shall, at a minimum, be
designed to: (a) ensure that the fundamental elements of
ECP
the ECP and any enhancements or revisions thereto,
Fundamentals
including a comprehensive annual risk assessment,
(Also MRA 3, 5, 6)
encompass residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities
Submission Ref
Task
Functional Lead
Status
Due Date
4a.1
Develop Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.2
Approve enhanced Mortgage Servicing Compliance Program Document
Compliance
Completed
6/13/2011
4a.3
Formalize Governance over Compliance Program
Compliance
In Progress
8/11/2011
4a.4
Enhance comprehensive annual Compliance Risk Assessment for Mortgage Servicing
Compliance
In Progress
7/15/2011
4a.5
Develop Compliance Training Program Standards
Compliance
In Progress
8/11/2011
4a.6
Appoint Mortgage Product Compliance Director
Compliance
Completed
6/1/2011
4a.7
Adopt CER test plan approved by the Director of Mortgage Product Compliance
Compliance
In Progress
8/11/2011
4a.8
Define MIS and management reporting requirements to improve efficiency and effectiveness of Compliance and other control
functions
Compliance / Operations
/ Controls & Emerging
Risk
Completed
6/30/2011
4a.9
Establish ongoing analysis of staff competency and capacity
Compliance
In Progress
8/11/2011
4a.10
Implement Mortgage Servicing Compliance Program
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
Compliance
Completed
6/13/2011
Controls & Emerging Risk
/ Compliance
In Progress
8/11/2011
Compliance
In Progress
8/11/2011
Functional Lead
Status
Due
The Order
Workplan
Submission Ref
Compliance with
Legal
Requirements and
Supervisory
Guidance
(Also MRA 3, 5, 6)
4b.1
Develop Mortgage Servicing Compliance Program Document
Paragraph 4 (b) - The plan shall, at a minimum, be
designed to: (b) ensure compliance with the Legal
Requirements and supervisory guidance of the Board of
Governors;
4b.3
Enhance Controls & Emerging Risk testing program
4b.4
Adopt enhanced scope and coverage of the regulatory requirements inventory
Workplan
Submission Ref
The Order
Paragraph 4 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that policies, procedures, and
processes are updated on an ongoing basis as
necessary to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors.
The Order
Updated Policies
and Procedures
(Also MRA 3, 5, 6)
Workplan
As of 7/12/2011
Task
Task
4c.1
Implement minimum standards to build a consistent regulatory change management framework across Mortgage Servicing
businesses at an enterprise level
Compliance
In Progress
8/11/2011
4c.2
Formalize existing change management process for regulatory changes, change in policies and procedures and business
process changes
Compliance
In Progress
8/11/2011
4c.3
Incorporate ongoing Legal notification system for regulatory / rules updates for US residential mortgages
Legal
In Progress
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 7
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 5 - Audit
Paragraph 5 - Within 60 days of this Order, Citigroup
shall submit to the Reserve Bank an acceptable written
plan to enhance the internal audit program with respect
to residential mortgage loan servicing, Loss Mitigation,
and foreclosure activities and operations. The plan shall
be based on an evaluation of the effectiveness of
Citigroup's current internal audit program in the areas of
residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities and operations, and shall include
recommendations to strengthen the internal audit
program in these areas.
Audit Plan
Submission
The Order
Workplan
Paragraph 5 (a) - The plan shall, at a minimum, be
designed to: (a) Ensure that the internal audit program
encompasses residential mortgage loan servicing, Loss
Mitigation, and foreclosure activities;
Scope of Audit
Program
(Also in MRA 1)
The Order
Workplan
Paragraph 5 (b) - The plan shall, at a minimum, be
designed to: (b) periodically review the effectiveness of
the ECP and ERM with respect to residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities,
and compliance with the Legal Requirements and
supervisory guidance of the Board of Governors;
Review
Effectiveness of
ECP and ERM
The Order
Workplan
5.1
Prepare the audit plan
ARR
Completed
6/6/2011
5.2
Submit the audit plan for approval through the Deliverable Submission Review Process
ARR
Completed
6/10/2011
5.3
Submit the audit plan to the FRB
Legal
Completed
6/13/2011
5.4
Implement the audit plan
ARR
In Progress
8/11/2011
Submission Ref
Functional Lead
Status
Due
5a.1
Evaluate the effectiveness of Citigroup's current internal audit program in the areas of Mortgage Servicing Activities and
implement enhancements
Task
ARR
In Progress
8/11/2011
5a.2
Document results of our coverage assessment.
ARR
Completed
6/30/2011
5a.3
Modify the internal audit program for the assessment of mortgage servicing activities, based on the evaluation.
ARR
Completed
6/30/2011
5a.4
Begin execution of revised audit programs across Citi US Mortgage Servicers.
ARR
Completed
6/30/2011
5a.5
Coordinate coverage or establish horizontal reviews across all Citi US Mortgage Servicers.
ARR
In Progress
8/11/2011
5a.6
Develop framework for the periodic evaluation of emerging risks leveraging Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.7
Execute periodic evaluations of emerging risks and determine assessment type; Business Monitoring, Assurance reviews, or
Targeted Reviews.
ARR
Completed
6/30/2011
5a.8
Develop audit program for Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.9
Conduct Mortgage Servicing targeted reviews specific to late charge assessments and SCRA.
ARR
Completed
2/28/2011
5a.10
Develop audit program for targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.11
Conduct targeted review of Third Party relationships against OCC guidance.
ARR
Completed
3/31/2011
5a.12
Develop data mining and retrievals that provide monitoring capabilities for ARR, CER or Business.
ARR
In Progress
8/11/2011
5a.13
Develop key risk indicators, including customer complaints, vendor performance and other indicators of emerging risks.
ARR
Not Started
8/11/2011
5a.14
Embed the use of data mining/automated testing that enables assessments across entire populations, for assurance reviews
executed under the revised audit program.
ARR
In Progress
7/15/2011
5a.15
Embed data mining and automated testing into new systems and processes; 'design in' versus 'built on' retrievals.
ARR
Not Started
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5b.1
Review and assess existing audit coverage of compliance and risk programs related to Mortgage Servicing Activities to identify
gaps in coverage.
ARR
In Progress
7/13/2011
5b.2
Develop ECP and ERM coverage plan, including scope and frequency of coverage, leveraging horizontal reviews across all
North America residential Real Estate Businesses
ARR
Not Started
8/11/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 8
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 5 (c) - The plan shall, at a minimum, be
designed to: (c) ensure that adequate qualified staffing
of the audit function is provided for residential mortgage
loan servicing, Loss Mitigation, and foreclosure activities;
The Order
Workplan
Adequate
Qualified Staffing
(Also MRA 8)
Workplan
Paragraph 5 (d) - The plan shall, at a minimum, be
designed to: (d) ensure timely resolution of audit findings Timely Resolution
of Audit Findings
and follow-up reviews to ensure completion and
effectiveness of corrective measures;
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
5c.1
Prepare a Mortgage skills assessment across ARR divisions
ARR
Completed
5/31/2011
5c.2
Develop on-going ARR Mortgage training strategy
ARR
Completed
6/30/2011
5c.3
Define ARR Mortgage end-state organization, including headcount, seniority levels, skills, regional alignment and
responsibilities.
ARR
Completed
6/30/2011
5c.4
Create a Mortgage Managing Director position to assess and define globally consistent coverage, including coverage
strategies for Compliance, Risk and vendors and ensure adequacy of staff and training.
ARR
Completed
5/30/2011
5c.5
Assess if adequate resources are in place to support data retrieval initiatives within the Mortgage program.
ARR
Completed
6/30/2011
5c.6
Ensure adequate resources are in place to support data retrieval initiatives within the Mortgage based on assessment results
ARR
Completed
6/30/2011
5c.7
Recruit and hire resources or contract staff required to fulfill the end state organization.
ARR
In Progress
8/11/2011
5c.8
Increase use of guest reviewers for Mortgage reviews.
ARR
Not Started
8/11/2011
5c.9
Enforce completion of a minimum of 48 hours of training by ARR Consumer Staff, including industry specific training covering
Consumer emerging risks and new regulations to ensure that staff are alert to the potential requirements for targeted reviews.
ARR
In Progress
8/11/2011
Task
Submission Ref
Functional Lead
Status
Due
5d.1
Continuously drive completion of corrective action plans for mortgage related issues through the performance of follow up
reviews and escalation of issues.
ARR
In Progress
8/11/2011
5d.2
Ensure on-going escalation to Business Management of past due corrective actions, especially those delayed greater than 60
days through BRCC and AWG forums.
ARR
In Progress
8/11/2011
Submission Ref
Task
Functional Lead
Status
Due
5e.1
Develop Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011 audit
committee meeting.
ARR
In Progress
7/15/2011
5e.2
Implement Audit Committee reporting to clearly highlight residential real estate issues and resolution beginning at 2Q 2011
audit committee meeting.
ARR
In Progress
7/31/2011
Functional Lead
Status
Due
The Order
Workplan
Paragraph 5 (e) - The plan shall, at a minimum, be
designed to: (e) ensure that comprehensive
documentation, tracking, and reporting of the status and
resolution of audit findings are submitted to the audit
committee; and
Comprehensive
Documentation
and Tracking
The Order
Workplan
Submission Ref
Escalation
Procedures for
Resolving
Differences of
Opinion
5f.1
Ensure compliance with the current escalation process to ensure proper communication of any differences or exceptions in
issue resolution.
ARR
In Progress
7/31/2011
5f.2
Formalize the audit issue escalation process as warranted.
ARR
In Progress
7/31/2011
Workplan
Submission Ref
Functional Lead
Status
Due
Paragraph 5 (f) - The plan shall, at a minimum, be
designed to: (f) establish escalation procedures for
resolving any differences of opinion between audit staff
and management concerning audit exceptions and
recommendations, with any disputes to be resolved by
the audit committee.
The Order
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 9
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Paragraph 6 - CitiFinancial Activities
Plan for
Strengthening
Coordination of
Loss Mitigation
Communication
with Borrowers
Review for
Impediments to
Loss Mitigation
Process
Paragraph 6 - Within 60 days of this Order, CitiFinancial
shall submit to the Reserve Bank an acceptable written
plan for strengthening coordination of communications
with borrowers, both oral and written, related to Loss
Mitigation and foreclosure activities to ensure that
CFNA Employee
communications are timely and effective, are designed to Incentives Review
avoid confusion to borrowers, to ensure continuity in the
handling of borrowers' loan files during the Loss
Mitigation and foreclosure processes by personnel
knowledgeable about the borrower's situation, and to
ensure that decisions concerning Loss Mitigation options
or programs continue to be made and communicated in
a timely fashion. Prior to submitting the plan,
CitiFinancial shall conduct a review to determine (i)
whether processes involving past due mortgage loans or
OCC IX a
foreclosures overlap in such a way that they may impair
OCC IX h
or impede a borrower's efforts to effectively pursue a
Loss Mitigation option or program, and (ii) whether
employee incentive compensation practices discourage
Loss Mitigation. The plan shall provide for at least the
same level of coordination of communications with
borrowers as the level that the Bank and CitiMortgage
are required to maintain in their Consent Order with the
OCC.
OCC IX b
The Order
Workplan
6.1
Develop a plan for strengthening coordination of Loss Mitigation communication with borrowers, as required
CFNA
Completed
5/10/2011
6.2
Submit plan for approval under Deliverable Submission Review Process
CFNA
Completed
6/6/2011
6.3
Submit plan to the FRB
Legal
Completed
6/13/2011
6.4
Implement plan for strengthening coordination of Loss Mitigation communication with borrowers
CFNA
In Progress
8/11/2011
6.5
Review CitiFinancial's relevant policy and procedures, branch training materials, standard customer letters and billing
statements, as well as interviews with key business managers for impediments to Loss Mitigation process
CFNA
Completed
5/5/2011
6.6
Review current incentive compensation practices to determine if they in any way discourage loss mitigation
CFNA
Completed
5/5/2011
6.7
Report results of the review to senior managers and obtain their concurrence on current compensation practices
CFNA
Completed
5/5/2011
6.8
Assess and review current policies and procedures as they relate to OCC IX
CFNA
Completed
5/5/2011
6.9
Augment policies and procedures to direct branch managers to place a hold on any account where a borrower is actively
pursuing loss mitigation with CitiFinancial
CFNA
Completed
7/25/2011
6.10
Augment policies and procedures to direct branch managers to place a hold on a borrowers account until any complaint
covering denial of a loss mitigation request is addressed
CFNA
Completed
7/25/2011
6.11
Implement quality control testing to ensure that branch managers appropriately place holds on accounts to prevent them from
transferring to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.12
Implement for existing branch audits, a review of whether branch managers appropriately place holds on accounts to prevent
servicing transfer to CitiMortgage when loss mitigation activity is pending
CFNA
In Progress
8/1/2011
6.13
Develop a plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
7/15/2011
6.14
Implement the plan for oversight of CitiMortgage's loss mitigation and default servicing activities only
CFNA
In Progress
8/1/2011
6.15
CitiFinancial will augment its policies and procedures to require formally that Branch Managers communicate all final Loss
Mitigation decisions to borrowers orally within 10 days of such decision.
CFNA
Completed
7/25/2011
6.16
Augment policy and procedures requiring branch managers to send any borrower who requests loss mitigation, a letter within
48 hours explaining required documentation and notifying borrower of the 30 day deadline for submitting required
documentation
CFNA
Completed
7/25/2011
6.17
CitiFinancial will improve these policies and procedures to require Branch Managers to send borrowers who are denied second
mortgage modifications a written notice of adverse action within 48 hours of the decision.
CFNA
Completed
8/1/2011
6.18
CitiFinancial will implement quality control testing to ensure that Branch Managers send borrowers timely letters explaining
Loss Mitigation documentation requirements, timelines, and decisions.
CFNA
In Progress
8/1/2011
6.19
Implement additional branch audit processes to determine if branches send borrowers timely letters explaining loss mitigation
documentation requirements, timelines and decisions
CFNA
In Progress
8/1/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 10
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 6 (Continued) - Within 60 days of this Order,
CitiFinancial shall submit to the Reserve Bank an
acceptable written plan for strengthening coordination of
communications with borrowers, both oral and written,
related to Loss Mitigation and foreclosure activities to
ensure that communications are timely and effective, are
designed to avoid confusion to borrowers, to ensure
continuity in the handling of borrowers' loan files during
the Loss Mitigation and foreclosure processes by
personnel knowledgeable about the borrower's situation,
and to ensure that decisions concerning Loss Mitigation
options or programs continue to be made and
communicated in a timely fashion. Prior to submitting
the plan, CitiFinancial shall conduct a review to
determine (i) whether processes involving past due
mortgage loans or foreclosures overlap in such a way
that they may impair or impede a borrower's efforts to
effectively pursue a Loss Mitigation option or program,
and (ii) whether employee incentive compensation
practices discourage Loss Mitigation. The plan shall
provide for at least the same level of coordination of
communications with borrowers as the level that the
Bank and CitiMortgage are required to maintain in their
Consent Order with the OCC.
Workplan
OCC IX c
OCCIX d
OCC IX e
OCC IX l
Submission Ref
Functional Lead
Status
Due Date
6.20
Implement additional branch audit processes to determine if branches appropriately direct borrowers whose servicing was
transferred to CitiMortgage Default Servicing
CFNA
In Progress
8/1/2011
6.21
Develop customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
7/25/2011
6.22
CitiFinancial will augment its policies and procedures to require that, when a borrower calls a CitiFinancial branch after the
servicing of the account has been transferred to CitiMortgage, the CitiFinancial branch manager will contact CitiMortgage with
the borrower on the line, subject to the borrower's permission, to transfer the call to CitiMortgage Default Servicing.
CFNA
Completed
8/1/2011
6.23
Implement customer transfer letter to notify borrowers of transfer to CitiMortgage Default Servicing
CFNA
Completed
8/1/2011
6.24
Enhance policies and procedures to identify the Branch Manager of each CitiFinancial branch as the single point of contact for
borrowers whose accounts are serviced by that branch and who request loss mitigation.
CFNA
Completed
8/1/2011
6.25
Written communications with borrowers who request Loss Mitigation will contain the name and contact information of their
Branch Manager, along with information for borrowers to contact other CitiFinancial branch employees in the event the Branch
Manager is unavailable.
CFNA
Completed
8/1/2011
6.26
Update systematic HUD homeownership counseling letter sent to borrowers at 40 days delinquent to include loss mitigation
options which explains to customers that modification options are available to borrowers
CFNA
Completed
7/30/2011
6.27
Reclassify training programs regarding mortgage delinquencies, loss mitigation, and loan modification from "suggested' to
"required" for all employees
CFNA
Completed
7/1/2011
6.28
Implement quality control testing to ensure branch managers appropriately send borrowers adverse action letters containing
reasons for the denial of the borrowers loan modification request
CFNA
In Progress
8/1/2011
6.29
Implement additional branch audit processes to determine if branch manager appropriately send borrowers adverse action
letters containing reason for denial
CFNA
In Progress
8/1/2011
6.30
Inclusion of local branch manager contact information on adverse action letters sent to borrowers denied loan modifications
CFNA
Completed
7/25/2011
OCC IX i
6.31
Inclusion of a toll free customer complaint hotline on the CitiFinancial self service website will facilitate borrowers calling to file
or escalate borrower complaints regarding loss mitigation, loan modification or foreclosure activities
CFNA
Completed
8/1/2011
OCC IX j
6.32
Monitor customer complaints concerning loss mitigation and establish a key risk indicator that will trigger targeted reviews to
branches
CFNA
Completed
8/1/2011
6.33
Ensure CitiFinancial has quality control testing to ensure that payments made to branches are appropriately posted and any
misapplication of funds is corrected in an appropriate and timely manner.
CFNA
Completed
6/30/2011
6.34
Implement quality control testing to ensure that branch managers appropriately track and maintain borrower loan files, and that
branch managers timely notify borrowers of missing documents
CFNA
Completed
8/1/2011
6.35
Implement additional branch audit processes to determine if branch employees appropriately track and maintain borrower loan
files, and that branch employees timely notify borrowers of missing documents
CFNA
In Progress
8/1/2011
OCC IX n
6.36
Augment or draft new policy to ensure that all junior liens owned by CitiFinancial are taken into consideration when analysis of
a loan modification begins on a CitiFinancial first mortgage
CFNA
Completed
8/1/2011
Workplan
Submission Ref
Task
Functional Lead
Status
Due
OCC IX f
OCC IX g
OCC IX k
OCC IX m
The Order
Task
As of 7/12/2011
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 11
Federal Reserve Board Consent Order Action Plan
The Order
Workplan
Submission Ref
Task
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
7.1
Updated policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities only
7.2
Submit policies and procedures for CitiFinancial oversight of CitiMortgage foreclosure activities
As of 7/12/2011
Functional Lead
Status
Due Date
Compliance
Completed
5/27/2011
CFNA
Completed
5/27/2011
Paragraph 7 - CitiFinancial Activities
Execute New SLA
Between
CitiFinancial and
Paragraph 7 - Within 45 days of this Order, CitiFinancial
CMI
shall submit to the Reserve Bank acceptable policies and
Establish
procedures for the oversight of foreclosure activities
Oversight
performed by CitiMortgage on behalf of CitiFinancial.
Committee
The policies and procedures shall, at a minimum, provide
for appropriate oversight of CitiMortgage's foreclosure
activities with respect to residential mortgage loans
otherwise serviced by CitiFinancial to ensure that
CitiMortgage complies with the Legal Requirements.
The Order
7.3
Draft Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/15/2011
7.4
Execute Service Level Agreement between CMI and CitiFinancial
CFNA
In Progress
7/31/2011
7.5
Establish Oversight Committee
CFNA
Completed
6/30/2011
7.6
Create template for reporting material concerns
CFNA
In Progress
7/31/2011
7.7
Obtain CMI Scorecards (Law Firms and Third Party Vendors)
CFNA
Completed
6/30/2011
Hire Oversight
Relationship
Manager
7.8
Create job description for Oversight Relationship Manager (RM)
CFNA
Completed
5/27/2011
7.9
Hire RM or designate interim RM
CFNA
Completed
6/9/2011
Schedule
Oversight
Committee
Meetings
7.10
Schedule quarterly internal meetings
CFNA
Completed
6/9/2011
7.11
Schedule quarterly meetings with CMI
CFNA
In Progress
7/31/2011
7.12
Schedule twice-yearly on-site reviews of CMI
Workplan
Submission Ref
Enhanced ERM
Program
8b.1
Adopt and implement the plan approved by the FRB to enhance the enterprise-wide risk management (ERM) program for the
U.S. Residential Mortgage Servicers
Enhanced ECP
Program
8b.2
Adopt and implement the plan approved by the FRB to enhance the ECP program
8b.3
Adopt and implement the plan approved by the FRB to enhance the Internal Audit program
8b.4
CFNA Oversight of
CitiMortgage
Foreclosure
Activity
8b.5
Workplan
Submission Ref
Develop
Processes for
Remote Reviews
of CMI
CFNA
In Progress
7/31/2011
Functional Lead
Status
Due
In Business Risk
Not Started
Within 10 Days of FRB
Approval
Compliance
Not Started
Within 10 Days of FRB
Approval
ARR
Not Started
Within 10 Days of FRB
Approval
Adopt and implement written plan, approved by the FRB, for strengthening communication with borrowers
CFNA
Not Started
Within 10 Days of FRB
Approval
Adopt and implement policies and procedures, approved by the FRB, in accordance with the CFNA oversight plan
CFNA
Not Started
Within 10 Days of FRB
Approval
Task
Paragraph 8 - Approval, Implementation, and
Progress Reports
Paragraph 8b - Within 10 days of approval by the
Reserve Bank, Citigroup and CitiFinancial, as applicable, Enhanced Internal
Audit Program
shall adopt the approved plans, policies, and
procedures. Upon adoption, Citigroup and CitiFinancial,
Enhanced
as applicable, shall implement the approved plans,
Borrower
policies, and procedures, and thereafter fully comply with
Communication
them.
Plan
The Order
Paragraph 8c - During the term of this Order, the
approved plans, policies, and procedures shall not be
amended or rescinded without the prior written approval
of the Reserve Bank.
The Order
Amendment
Requests
Workplan
Functional Lead
Status
Due
8c.1
Draft proposed changes to approved plans, policies, and procedures, as necessary
Legal
Not Started
Ongoing
8c.2
Submit proposed changes to approved plans, policies, and procedures for approval under the Deliverable Submission Review
Process, as necessary
Legal
Not Started
Ongoing
8c.3
Request written approval for proposed changes to approved plans, policies, and procedures from the FRB, as necessary
Legal
Not Started
Ongoing
Functional Lead
Status
Due
Submission Ref
Task
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 12
Federal Reserve Board Consent Order Action Plan
The Order
Paragraph 8d - During the term of this Order, Citigroup
and CitiFinancial, as applicable, shall revise the
approved plans, policies, and procedures as necessary
to incorporate new or changes to the Legal
Requirements and supervisory guidance of the Board of
Governors. The revised plans, policies, and procedures
shall be submitted to the Reserve Bank for approval at
the same time as the progress reports described in
paragraph 9 of this Order.
The Order
Workplan
Revision to the
Approved Plans,
Policies, and
Procedures
Workplan
Submission Ref
Task
As of 7/12/2011
Functional Lead
Status
Due Date
Operations
Not Started
Ongoing
8d.1
Obtain revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance from
repository, as necessary (Citigroup and CFNA)
8d.2
Submit revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to Boards,
as necessary (Citigroup and CFNA)
Legal
Not Started
Ongoing
8d.3
Attach revised plans, policies and procedures reflecting changes to Legal Requirements and supervisory guidance to progress
reports for submission to the FRB, as necessary (Citigroup and CFNA)
Legal
Not Started
With progress reports
Submission Ref
Task
Functional Lead
Status
Due
6/10/2011
Paragraph 9 - Approval, Implementation, and
Progress Reports
Paragraph 9 -Within 30 days after the end of each
Compliance
Committee
calendar quarter following the date of this Order,
Progress Reports
Citigroup's and CitiFinancial's boards of directors, or
authorized committee of the boards of directors, shall
jointly submit to the Reserve Bank written progress
reports detailing the form and manner of all actions taken
to secure compliance with the provisions of this Order
and the results thereof.
Monitoring
Implementation
The Order
Workplan
9.1
Evaluate Compliance Committee Progress Report requirements as per the Consent Order
Independent Risk / PMO
Completed
9.2
Design template for written Progress Report as per Consent Order requirements
PMO
Completed
6/20/2011
9.3
Validate Progress Report template with key stakeholders
PMO
Completed
6/25/2011
9.4
Produce Initial Progress Report
PMO
Completed
7/10/2011
9.5
Submit Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
7/15/2011
9.6
Submit Progress Report to Citigroup Board for review and approval
PMO
Not Started
7/20/2011
9.7
Submit first quarterly Progress Report to FRB
Board / Legal / MCC
Not Started
8/1/2011
9.8
Produce second quarterly Progress Report
PMO
Not Started
10/10/2011
9.9
Submit second quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
10/15/2011
9.10
Submit second quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
10/20/2011
9.11
Submit second quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
10/31/2011
9.12
Produce third quarterly Progress Report
PMO
Not Started
1/10/2012
9.13
Submit third quarterly Progress Report for approval under Deliverable Submission Review Process
PMO
Not Started
1/15/2012
9.14
Submit third quarterly Progress Report to the Citigroup Board
Board / Legal / MCC
Not Started
1/20/2012
9.15
Submit third quarterly Progress Report to the FRB
Board / Legal / MCC
Not Started
1/30/2012
9.16
Produce future Progress Reports for FRB submission quarterly, as required
PMO
Not Started
As Required
9.17
Submit future quarterly Progress Reports for approval under Deliverable Submission Review Process
PMO
Not Started
As Required
9.18
Submit future Progress Reports to Citigroup Board
Board / Legal / MCC
Not Started
As Required
9.19
Submit future Progress Reports to the FRB
Board / Legal / MCC
Not Started
As Required
9.20
Develop status reporting after 60 day submission
PMO
Completed
6/15/2011
9.21
Develop Board status reporting calendar
PMO
Completed
7/1/2011
9.22
Submit Board status report to the MCC for review
PMO
Completed
7/5/2011
Functional Lead
Status
Due
Submission Ref
Task
CONFIDENTIAL SUBMITTED SUBJECT TO 12 U.S.C. § 1828(x)
Page 13
Appendix 4 –
Glossary
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
Glossary of Terms
2MP
Second Lien Modification Program
ARR
Audit and Risk Review
Bank
Citibank, N.A.
BISO
Business Information Security Officer
BP&A
Business Planning & Analysis
BRCC
Business Risk Compliance and Control Committee
BSA
Branch Self-Assessment (CitiFinancial)
CAMBRS
Citi Anti-Money Laundering Business Rule Standards
CAP
Corrective Actions Plan
CARA
Compliance Annual Risk Assessment
CARE
Customer Account, Research, and Escalation Unit (CitiFinancial)
CASP
Citi Approved Supplier Program
CBNA
Citibank, N.A.
CER
Control and Emerging Risk
CIP
Compliance Implementation Plan
CISS
Citi Information Security Standards
Citi
Citigroup, Inc. and its subsidiaries
Citibank
Citibank, N.A.
Citigroup
Citigroup, Inc.
CitiFinancial
CitiFinancial Credit Corporation
CitiMortgage
CitiMortgage, Inc.
CMAC
Capital Markets Product Approval Committee
CMR
Center Manager Review (CitiFinancial)
Consent Orders
The FRB Order and the OCC Order, collectively
Covered Business Unit
For purposes of this document, Mortgage Servicing operations,
including collections, loss mitigation, foreclosure operations,
Independent Risk, In-business Risk, CER, and Compliance
-1-
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
CPAC
Consumer Product Approval Committee
CPB
Citibank Private Bank
CRMS
Corporate Resolution Management System (MERS)
CSA
Center Self-Assessment (CitiFinancial)
CSS
Citi Shared Services
CSSMP
Citi Supplier Selection and Management Policy
CTU
Central Testing Unit
Deliverable Submission
Review Process (DSRP)
Deliverables requiring approval prior to going to the MCC go
through the tollgate process (as necessary), the IC, the ESC, and
the SEOC (as necessary)
DERU
Default Executive Response Unit
DMR
District Manager Review (CitiFinancial)
DRI
Document Retrieval System (CitiMortgage)
ECP
Enterprise-Wide Compliance Program
ERM
Enterprise-Wide Risk Management
ERU
Executive Response Unit
FTE
Full time equivalent
FRB
Board of Governors of the Federal Reserve System
FRB Order
The Consent Order issued on April 13, 2011, by the Board of
Governors of the Federal Reserve System in the matter of
Citigroup Inc. and CitiFinancial Credit Company
FRB SR 08-8
The Reserve Bank Supervision and Regulation Letter titled
“Compliance Risk Management Programs and Oversight at Large
Banking Organizations with Complex Compliance Profiles”
GLMS
Global Learning Management System
GSE
Government Sponsored Enterprise
GSM
Global Securitized Markets
HAMP
Home Affordable Modification Program
HR
Human Resources
iCAPS
Citi’s centralized issue and tracking system
ICG
Institutional Clients Group
-2-
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
KRI
Key Risk Indicator
Legal Requirements
All applicable state and federal laws (including the U.S.
Bankruptcy Code and the SCRA), rules, regulations, and court
orders, as well as MERS Membership Rules, servicing guides with
GSE or investors, and other contractual obligations, including
those with the Federal Housing Administration and those required
by HAMP, and loss share agreements with the Federal Deposit
Insurance Corporation
LMS
Learning Management System (CitiFinancial)
Loss Mitigation
Activities related to special forbearances, repayment plans,
modifications, short refinances, short sales, cash-for-keys and
deeds-in-lieu of foreclosure that involve non-performing
residential mortgage loans
MAC
Modification Assessment Control
MCC
Mortgage Compliance Committee
MCS
Most Critical Supplier
MERS
MERSCORP, Inc. and MERS, Inc., collectively
MERS Requirements
MERS membership rules, terms, and conditions
MIS
Management Information Systems
Mortgage Servicing
Activities
The U.S. residential mortgage loan servicing, Loss Mitigation, and
foreclosure activities that are the subject of the Consent Orders
MPC Director
Director of Mortgage Product Compliance
MSD
CitiMortgage Master Servicing Department
NTC
Nationwide Title Clearing
O&T
Operations & Technology
OCC
Office of the Comptroller of the Currency
OCC Order
The Consent Order, issued on April 13, 2011, by the OCC, in the
matter of Citibank, N.A.
OLM
Online Manual
ORM
Operational Risk Management
OSP
Outsource Service Provider
PMO
Project Management Office
QA
Quality Assurance
-3-
FOIA CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO
5 U.S.C. § 552(b); 12 C.F.R. §§ 261.14(a)(4), 261.14(a)(8)
QC
Quality Control
RCSA
Risk Control Self Assessment
REL
Real Estate Lending
REOSC
Real Estate Operations Steering Committee
RESC
Real Estate Steering Committee
Reserve Bank
Federal Reserve Bank of New York
Risk Management &
Control Programs
Citi’s enterprise-wide risk management, compliance, and internal
audit programs, collectively
RMFC
Risk Management and Finance Committee
RRI
Regulatory Requirements Inventory
RRM
Regulatory Risk Matrix
SCC
Servicing Compliance Committee
SCM
Strategic Cost Management
SCRA
Servicemembers Civil Relief Act
Servicers
Third parties who own servicing rights
SLA
Service-Level Agreement
SME
Compliance Subject Matter Expert
SORM
Senior Operational Risk Manager
SPOC
Single Point of Contact
TPISA
Third Party Information Security Assessment
U.S. Residential Mortgage All Citi businesses that service U.S. residential mortgage loans
Servicers
-4-