Citigroup Inc.’s failure to pay 24,000 people owed money as part of a settlement with the government over foreclosure abuses has prompted a U.S. lawmaker to call for an investigation into whether banks missed other borrowers.

Maxine Waters, the senior Democrat on the House Financial Services Committee, sent a letter Friday to the inspectors general of the Federal Reserve and the Treasury Department seeking an examination. Her request pertains to a 2013 accord in which lenders agreed to pay $10 billion to resolve allegations that they improperly initiated hundreds of thousands of foreclosures following the housing bust.

Waters is seeking a probe after Bloomberg News reported earlier this month that thousands of borrowers who were entitled to compensation from Citigroup never got checks. The bank took action after one borrower’s complaint caused regulators to reexamine the settlement.

“Thankfully, this error was discovered,” Waters of California wrote in the letter to Mark Bialek at the Fed and Eric M. Thorson at Treasury. The situation “has raised questions as to whether there are other borrowers who have not been properly compensated by other servicers,” she added.

Single Complaint

Waters’ letter said a person who filed a complaint through a government website triggered the late rush of checks. Citigroup had already paid 357,000 borrowers.

The Office of the Comptroller of the Currency, which coordinated the bank’s settlement, confirmed that the website complaint spurred the additional payments.

Initially, the OCC told New York-based Citigroup that it didn’t have to include the 24,000 people in the settlement, said Bryan Hubbard, an agency spokesman. The regulator, part of the Treasury, changed course after reviewing the complaint, he said.

Citigroup -- the third-largest bank in the U.S. -- will pay the added borrowers $19 million in checks set to be sent in April, the OCC said. Compensation will range from $500 to $62,500, depending on the potential harm done.

An OCC report last year showed Citigroup had already made cash payments of $300 million, while spending an additional $500 million on foreclosure-prevention efforts.

“As we have said in the past, we are fully committed to fulfilling our obligations,” said Liz Fogarty, a Citigroup spokeswoman, in an e-mail. She didn’t address details of the late payments.

Flawed Systems

The fact that a single grievance led to so many overlooked borrowers now getting money prompted Waters to question how the OCC and Fed are reviewing any additional complaints.

Her letter outlines a list of points the watchdogs could pursue, including what happened with Citigroup and what flaws in the bank’s systems led to confusion over identifying the right borrowers.

“Every reasonable effort has been made to identify all of the eligible borrowers, and we are highly confident in this process,” Hubbard said. If others think they’ve been left out, he said, they can go through the same OCC Customer Assistance Group site that this person did, at www.helpwithmybank.gov.

Under the 2013 accords with regulators, Citigroup and 14 other mortgage servicers resolved allegations that they mishandled loan papers and robo-signed legal documents. Paying borrowers was a key requirement of the settlements.

Read full story at Bloomberg.com