Citi Freezes Correspondent Lending Division
[Update 1] Citigroup (C) last night put mortgage applications in its correspondent lending channel on hold for eight days, citing a re-engineering and tightening of the standards involved with the loans. A spokesperson confirmed to HousingWire the company entered the temporary suspension over "quality control" issues surrounding documentation of appraisals or income verification seen in -- or missing entirely from -- previous mortgages purchased through the channel. Lenders like Citi purchase mortgage loans originated by independent mortgage bankers through correspondent channels. "We review our quality control practices on an ongoing basis, and we have identified areas of improvement," the spokesperson, Mark Rodgers, tells HousingWire this morning. "We will temporarily suspend the acceptance of correspondent mortgage loan registrations while we work with correspondent customers to make improvements to this important business that will ensure the continued delivery of superior quality loans." Citi is encouraging its correspondent clients to take the time to also review documentation processes to ensure the quality of loans originated for the lender to purchase. Rogers says the temporary suspension affects no other lending channel at the company. Regulators and public criticism keep a close watch on Citi's mortgage decisions these days, as the firm was found to lack $5.5bn in the wake of government-initiated stress tests, even with $45bn in Troubled Asset Relief Funds on hand and another $5bn promised in asset guarantees. As of early June, regulators were reported to be pushing for an executive overhaul at the firm. In mid-May the bank earmarked $1bn to refinance qualifying mortgages. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.