American International Group Inc. has entered into an enforcement agreement with the Office of Thrift Supervision to improve the practices of three subsidiaries.
The agreement, announced Friday, covers subprime mortgages originated from July 2003 to May 2006 by Wilmington Finance Inc. and American General Finance Inc., affiliates of AIG Federal Savings Bank. The OTS charged that the thrift did not manage or control the lending activities outsourced to its affiliates. The OTS said Wilmington assessed the creditworthiness of some borrowers incorrectly and charged large broker and lender fees.
AIG agreed to establish a $128 million pretax fund to refinance affected borrowers into affordable loans and reimburse borrowers who paid large broker or lender fees. The company also agreed to terminate the objectionable practices, donate $15 million to financial literacy and credit counseling services, and establish a mechanism for resolving consumer complaints.
