Citigroup has begun forgiving some consumer debt in accordance with a July settlement with the Justice Department, but this is relief that the bank may have provided even without the settlement, an independent monitor said Wednesday.

The Justice Department in July required Citi to provide $2.5 billion of consumer relief as part of a settlement of claims the company misrepresented residential mortgages it sold before the financial crisis. The settlement also required Citi to pay a $4 billion penalty and a combined $500 million to the Federal Deposit Insurance Corp. and five states.

The settlement gives Citi several ways to earn credit toward the $2.5 billion in consumer relief: Forgiving loan principal, reducing loan rates, funding affordable housing or investing in community projects.

Through late November, Citi had earned credit for just under $14 million of relief, according to the first report of settlement monitor Thomas Perrelli, a lawyer at Jenner & Block. Citi claims to have provided additional relief, though it didn't provide a dollar figure. The company has until the end of 2018 to provide the full $2.5 billion in relief.

The $14 million figure was based on a review of 100 loans Citigroup selected to test its process for complying with the settlement. Citi selected loans with no equity, meaning the projected cost of foreclosure was higher than the recovery the company could expect through a sale.

The loan selection raises the question of whether the consumer-relief portion of the settlement is having an impact, or whether Citi is getting credit for writing off loans it would have written off anyway, the monitor said. The answer appears to be "mixed," Perrelli wrote.

It is common for banks to write off loans when the cost of foreclosure is higher than the sale value, as Citi is doing.

However, banks don't always release the liens on the property when they write them off, which can cause headaches for the borrower. By releasing its claim to the properties, Citi is "giving an additional benefit to the homeowner to allow him or her to make a fresh start and to remove any legal obstacles from the transfer of the property," the monitor wrote.

The monitor's report was based on data provided by an internal review group made up of Citi employees and vendors. Perrelli also reviewed whether the credit Citigroup claimed matched the value of the relief provided, how the company selected the loans, and whether the internal review board was adequately separated from the bank's mortgage group, among other things.

Perrelli plans to release quarterly reviews of Citi's progress toward meeting the settlement requirements. Future reports will include more exhaustive reviews to ensure that the bank is providing the relief claimed, the report said.

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