Citigroup to revamp mortgage business

Citigroup to revamp mortgage business

 

CITIGROUP plans to cut its home loan exposure by US$45 billion, reduce risk and save US$200 million a year in an overhaul of its US residential mortgage business.

 

The largest US bank, which suffered a US$9.83 billion fourth-quarter loss tied largely to mortgages, also plans to fold its Citi Home Equity and Citi Residential Lending businesses into its existing CitiMortgage Inc unit.

 

Over the next year, Citigroup plans to reduce by about one-fifth its roughly US$213 billion US consumer mortgage portfolio, largely by running off existing loans.

 

By the third quarter, it also plans to sell to Fannie Mae and Freddie Mac, or package into securities, 90 per cent of home loans it makes, up from 65 per cent in 2007.

 

Citigroup will also further tighten underwriting, though it will still offer sub-prime mortgages and home equity loans, unlike rivals that have stopped as default rates soared.

 

Savings will result from an unspecified number of job cuts, the consolidation of technology and operating platforms, and combining sales staff, CitiMortgage president Bill Beckmann said. The mortgage units employ about 13,000 people, he said.

 

According to its annual report, Citigroup ended 2007 with US$150 billion of first mortgages and US$63 billion of second mortgages, including home equity loans, on its books. — Reuters

 

Source: Business Times

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s