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Citigroup severs ties with 3,600 brokers working for controversial subprime lender

NEW YORK - Citing "integrity concerns," Citigroup Inc., suspended business with more than 3,600 brokers who used to do business with Associates First Capital Corp., a subprime lender acquired last year by the banking conglomerate. Referring to a company internal memorandum, the Wall Street Journal reported that Citigroup has severed...

By Staff Writer | Updated on September 11, 2001

NEW YORK – Citing “integrity concerns,” Citigroup Inc., suspended business with more than 3,600 brokers who used to do business with Associates First Capital Corp., a subprime lender acquired last year by the banking conglomerate. Referring to a company internal memorandum, the Wall Street Journal reported that Citigroup has severed ties with 64% of the brokers who used to do business with Associates for having inadequate or suspended state licenses, failure to bring in regular, quality business, integrity concerns and failing to acknowledge the code of conduct. Citigroup also said that as part of a review of lending practices, it has suspended 1,203 pending foreclosures where it was determined that there was “a serious enough problem in the way the loan was originated to warrant suspension of the foreclosure action.” It said almost all the suspended foreclosures were on loans originated by Associates. Associates had been accused of targeting low-income families, the elderly, minorities and those with poor credit histories with misleading and excessive home equity loan and insurance terms and fees. Specifically, the firm had been criticized for requiring borrowers to purchase single-premium credit insurance, which is paid in a lump sum at the start of a home equity loan. Citigroup has since done away with this type of insurance. The Associates is currently named in 750 lawsuits and had been under investigation by the Federal Trade Commission and the U.S. Justice Dept.

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