Banking on Poverty
The world's largest financial institution has a new market: high-interest loans to low-income customers.
Maria Flores was frightened. She was behind on repaying a personal loan, she says, and her finance company in Atlanta was threatening to have her arrested. Flores agreed to take out another loan, which turned out to be a second mortgage on her home. When she couldn't keep up with the new debt on her yearly take-home pay of $22,000, the loan company had another solution: yet another mortgage. She wound up paying an annual percentage rate of 17.99 -- three times the market rate for home loans -- and nearly $700 for life, disability, and unemployment insurance that was written into the contract. It's a familiar story: a consumer with modest income or bad credit being charged astronomical interest rates by a predatory lending outfit. But Flores was not the victim of some shady storefront operation. She got her loans from a division of Citigroup, the world's largest financial institution. In recent years, the bank has aggressively swallowed up so-called subprime lenders, establishing itself as a leader in high-interest loans marketed to low-income, blue-collar, and minority customers.
CitiFinancial, the bank's principal subprime unit, charges many of its 4.3 million customers double or triple the prices paid by consumers with Citi credit cards and conventional mortgages -- annual interest rates as high as 22 percent on mortgages and 40 percent on personal loans. In addition, a host of lawsuits accuse CitiFinancial of packing loans with hidden fees and overpriced insurance that help shove unsuspecting borrowers into foreclosure or bankruptcy. "Citigroup is the leader when it comes to predatory lending," says Matt Lee, executive director of Fair Finance Watch, a New York-based consumer group. "They've got it down to a science." Citi denies that it engages in predatory lending, insisting that high rates are reserved for high-risk customers who might not otherwise qualify for a loan. CitiFinancial helps "working people like teachers, firemen, nurses, and secretaries," says spokeswoman Maria Mendler. "Our customers come back to us time and again because they like our service, our people, and our product." The high-interest loans have certainly bolstered Citi's bottom line. CitiFinancial posted earnings of more than $1.3 billion last year -- nearly one-tenth of Citigroup's total income. But the bank's subprime business has also sparked federal scrutiny and class-action lawsuits. In Pennsylvania, borrowers have accused CitiFinancial of using early-payment penalties to trap them into costly loans. A state appeals judge called the case "yet another vignette in the timeless and constant effort by the haves to squeeze from the have-nots even the last drop." Last fall, Citigroup agreed to pay $240 million to settle Federal Trade Commission charges and a class-action lawsuit alleging that Associates First Capital, a finance company purchased by Citigroup in 2000, had manipulated 2 million customers into buying overpriced mortgages and credit insurance. It was the largest settlement in FTC history. Citi insists that the predatory practices ended when it acquired Associates. over the past two years, the bank has introduced a host of reforms, pledging to offer lower-cost loans to customers who have good credit but are paying prices far above the prime rate. So far, though, Citi has yet to make good on its promise. The lender has identified more than 25,000 customers being charged high interest who qualify for prime-rate mortgages. By the end of last year, however, just 110 had been moved into lower-rate loans. Former CitiFinancial employees report that the company has done little to change its ways. Kelly Raleigh, a former branch manager for CitiFinancial in Jefferson City, Tennessee, says Citi continues to pressure loan officers to ratchet up interest rates and sell more insurance. The message from above, she says, is clear: "Don't get in trouble. But you still have to do this. If you don't hit your quota, you're not gonna have a job." In addition, borrowers say they are still being saddled with hidden costs. Gaylon Barnes, a heating and air-conditioning repairman in Atlanta, says CitiFinancial stuck him with more than $800 in unwanted insurance on a home loan in November. If Citi has reformed, he says, "I can't tell." In April, Barnes was one of 50 borrowers from the South and Midwest who traveled to New York to stage a protest at Citi's annual shareholders meeting. Organized by an advocacy group called the Neighborhood Assistance Corp. of America, the demonstrators drove through the night from Atlanta, arriving in a convoy of eight passenger vans after 17 hours on the road. Just before the meeting, however, officials from Citigroup headed off a high-profile protest by agreeing to consider reworking the loans of thousands of borrowers who have lodged complaints. Those who made the trip say they are pleased that Citi agreed to concessions -- but some remain skeptical that the financial giant will voluntarily end its abuses. "They're trying to pacify the activists," says Maria Flores, who joined the convoy. "I think they'll take their sweet time responding -- until they're really forced to."
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I am too a victim of Citi Financial and a victim of my own Insecurities. I wished I never applied for a loan from them. Now i so-called earned more than I borrowed. I was paying them every month for 8 months,I was in financial trouble they revamped my loan only to start all OVER AGAIN WITH A HIGHER LOAN TOTAL. I AM SICK WITH WORRY.THEY KNOW HOW TO SET UP YOUR LOANS SO WHEN YOU REAPPLY WITH ANOTHER RE-VAMPED LOAN WITH A PROMISE OF LOWER INTEREST RATE THEY STILL MANAGE TO GET MORE OUT OF YOU. I'M SICK FROM THIS.
A WARNING DON'T APPLY FOR CITI FINANCIAL OR ANY-ONE ELSE(LOAN COMPANY) YOU WILL FEEL SORRY LATER. MY ADVICE TO "YOU"
IT'S BEST TO WAIL IT OUT, DO SOME PRAYING AND WEATHER THE STORM. I ALSO FEEL THAT THESE COMPANIES HAVE GOTTEN WORST! COMCAST CABLE COMPANY IS ANOTHER ONE THEY DOUBLE YOUR BILL WITH AN PROMOTION AND WHEN YOU ORDER SOME SERVICE WITH THEM AT A CERTAIN TIME OF THE MONTH, THEY PRO-RATE.==MEANING THEY DOUBLE THAT ENTITY PART OF SERVICE YOU WISH TO REQUIRE. IT SHOULD BE ILLEGAL. UNDER THE BUSH PRESIDENCY COMPANIES HAVE PLAYED THE GREED GAME WITH NO FORETHOUGHT TO THEIR CONSUMERS, IT'S A SICKING TREND. "WATCH-OUT." GET WHATEVER YOU WISH TO ACQUIRE IN WRITING FIRST THEN AFTER THAT MAKE A CLEAR JUDGMENT OF THE SERVICE YOU WANT. ALSO TO HAVE A FALL BACK ON ANY DISCRIPINCIES ON ANY ISSUES THAT ARISE FROM THESE COMPANIES.
My truck loan from Citi is 111% they offered me another loan for $7500 at 52%!! Good deals!
This company has screwed me in every way possible. I just wish I could find someone that would help me.
I'm so glad you are informing people about this. This is the highest form of corruption in the money lending business I've ever experienced. I got out of my loan with them recently and they're still sending me notices to re-loan. NEVER. I have a question. Does Prime America own CitiFinancial?
YOu can email me at a_bangos@yahoo.ca
Does Citi Financial or any other big banks own check advance businesses??
My e-mail (xxx3putt@yahoo.com)
citi charged me 388.14 for single interest insurance.my loan was paid off 33 months early.the insurance company {triton insurance]wrote them a letter saying to refund the unearned premium.i still have received nothing,although it is owed.
I went to citifinancial with an excellen credit score, and the best rate they could give me on a personal
loan was 18.9 % intererest. This is sick!!!!
Wow!I have been offered employment at this company but feel that they are shady for the simple fact that I have heard more bad things than good!
Citi Financial interest rates are outrageous! I borrowed, being naive, $7,500. Iam now making 59 monthly payments of $252. I will be paying back double($15,000). Is this even legal?
Are you kiddinge me?? You should all be thrown in jail for slander!! This company does not have an interest rate above 30% and they always give you the option of taking insurance or not! the choice is yours...borrow from someone else if you want!!
I borrowed because I was desperate. In hindsight, I would've ridden out the storm. Now I'm into those crooks for "double" what I borrowed. This is how they make their money. And to the "employee". The insurance wasn't optional when I signed the papers! It was obvious that "something was in it for them" with regards to the insurance. Citi is no different from payday loan places. But ... when we screw up our credit, we don't have many choices. Still ... I say "ride it out". Put those clowns out of business!
The employee that felt that we should be sued for slaner well you should be sued for loan sharking! I was also foolish and finaced my house thru them, they made me beleive that my credit was so bad that I had no other choice! I was also told that I could refi after six months with a normal rate. Well that never happened! I now am so far in debt trying to keep up with this awful loan! I also found out that after they would not refi me lower< I went to a differant bank and was told that I had good scores and that they could help me, until I found out that the appraisel that citi had done and accepted was wrong!! They should of caught the BIG mistake there appraiser made! But why should they now I owe more money on the house than its worth in wich I couldn't re do my loan!! I went to citi about this and to put it simple they don't give a s###! I know face a mess of maybe loseing my house. I don't understand all of these banks are loosing money but they do this to people that are good people!! What do I do?
I feel a little better knowing I am not the only one who has been ripped by Citifinanial. My sympathy goes out to everyone who is stuck in one of these predatory loans. My nightmare started with the ASSociates. I had a fairly decent credit score and a decent loan at a "real" bank. They sent an unsolicited loan proposal to me in the mail and I took the bait. They promised to pay off my debts, etc., and to re-finance at an OK rate. Well, it was a classic bait and switch! First, they had an their "own" appraiser overappraise my house by 25%, they lowered the amount of debts that they would pay off before I signed, they sold me a bogus $7,500 insurance policy and padded the loan with points, fees, etc. This loan has made my life a nightmare ever since! No, they didn't hold a gun to my head and make me sign, but at the time I was very naive and in need of money...so, being the land sharks that they are, they smelled blood and ripped flesh. Long story short, I have paid over 60K to them and still have not paid down my debt! I am getting all my paperwork together and will be looking for a lawyer by February to get out of this loan hell that I have been in for the last 8 years. I am suprised that I have not dropped dead from working the 60 plus hours that I have to work every week to stay afloat. Good luck to everyone in one of these loans.
where did you find someone stupid enought to look for a loan?
Grow UP!!
I am sick and tired of people complaining about Citi . Citi fully discloses all options to each customer I stress the word OPTIONS. Each customer is treated with respect and is given undivided attention. We take the time to listen to our customers and find a solution that best fits their needs. We also take each opportunity to explain the
importance of good credit and how to maintain it while saving for their future and their childrens future. Our clients keep coming back because we are good to them and there are always a few bad apples who go and spend money they do not have and live beyond their means always come back and complain. It is not my fault that people do not take responsibility for themselves and their finances. I can give them the info and take the time to explain it , but what they do from there is always a precursor for how they feel about Citi, if the customer is good with a budget we hear rave reviews and if they are bad with money then Citi is evil..lol ... get a clue people , America is in the shape it is in because of you who long to keep up with the jones. I prefer to keep up with a roof on my head , clothes on my back, food on my table and the good Lord guiding me. He did not say he would give us everything we wanted but he did say we would have what we needed if we would trust in him
Citi has recently decided to
Citi has recently decided to call in interest on loans to customers of Leons, customers that had purchased on 18month no interest no payment contracts. Now they are looking to change the terms. I say screw citi and I hope they get no more bailout money and go belly up. They deserve nothing more.
citifinancial
They have not changed and it is 2009.
So melanoma rates have been
So melanoma rates have been rising steadily with sunscreen
sales...what's in sunscreen? The skin absorbs a large percentage of what
is put on it, could the fun chemicals in the sunscreen be causing major
health problems? Follow the money and you'll be amazed at what you'll
find.
