Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 21, 2012

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Citigroup settled with borrowers whose Home Equity Lines of Credit, more commonly referred to as HELOCs, were suspended or cut due to alleged decreases in property values, according to settlement papers filed on Aug 31.

A HELOC is a loan in which borrowers use their home as a line of credit. Borrowers are then able to take money out of that line of credit.

The incident began in January of 2009. A lawsuit was filed claiming that in 2008 Citigroup began to send HELOC suspension or reduction notifications to borrowers whose homes had lost a significant amount of value.

The lawsuit states that the homes had not lost a significant amount of value and that Citigroup was operating a “thinly-veiled, unlawful attempt to limit its exposure to the risk of collapse in the United States housing market and to rid itself of below-market interest rate loans.”

As part of the settlement, Citigroup will reform some of its home equity lending practices. The bank has also agreed to let borrowers who lost access to their HELOCs recover some fees. Borrowers will also have a chance to reinstate their accounts.

Citigroup said it will give each borrower who closed a HELOC following a suspension or reduction a chance for a $120 payment. The bank also agreed to expand disclosures in notices sent to borrowers.

“Citi is pleased to have this matter resolved,” said Mark Rodgers, spokesman for Citigroup.

While Citibank is undoubtedly pleased that this matter will not go to court, the bank did not admit wrongdoing in the settlement.

The law firm representing the former HELOC borrowers, Edelson McGuire, plans to seek as much as $1.21 million to cover legal fees and expenses.

This current Citigroup settlement is but the latest of several concerning incidents of banking practices related to housing, credit and financial crises over the last few years. On Aug 29, Citigroup announced a $590 million settlement of a shareholder lawsuit that claimed Citigroup had hid several billion dollars worth of toxic mortgage loan assets.