While selling of delinquent mortgages slowed in the second half of 2011 and 2012 for Citigroup (C), overall mortgage sales picked up in the third quarter of this year, reflecting the markets more constructive outlook of sustainability for the housing recovery, according to chief financial officer John Gerspach of the bank.

The sale of delinquent mortgages is part of Citi Holdings, a group of assets and businesses the bank is looking to divest over time, Gerspach said during the Goldman Sachs Financial Services Conference on Wednesday.

In July, chief executive Vikram Pandit also mentioned the banking giant’s primary concern of its mortgage portfolio as it continued to wind down assets in Citi Holdings. 

The New-York based bank has not released any loan loss reserve against its mortgage portfolio to date.

“We continue to watch the market closely and note housing is improving,” Gerspach said. “We would like economy clarity on economic trends in the U.S. before we can conclude that the housing recovery is sustainable.”

Year-to-date, Citi has made $1.6 billion of delinquent mortgage sales.

Click on the graph to view mortgage sales from 2010 to 2012.


In a separate unrelated announcement, Citi said it would cut 11,000 jobs, reducing its work force to about 4% in an effort to cut costs on Wednesday.

About 1,900 jobs will be cut in the institutional clients division, 6,200 positions will be removed from the bank’s consumer banking business and 2,600 jobs in the operations and technology group will be removed.

“These actions are logical next steps in Citi’s transformation,” CEO Michael Corbat of Citi said in a statement. “While we are committed to – and our strategy continues to leverage – our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns.”

The bank is expected to take a pretax charge of about $1 billion in the fourth quarter and $100 million of related charges in the first half of 2013.


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