Citi Residential Lending - Wholesale - Subprime, Alt-A

In a 9:30am conference call this morning, layoffs were announced for Citi Residential Lending headquartered in Orange, CA. According to one AE we spoke with, only 50 reps will remain out of some 500, and the office will be closed by June of this year. A second conference call scheduled for 3pm today will probably let those remaining know what lies ahead as the unit is absorbed into CitiMortgage. A call to Citi Residential's media relations department was not immediately returned.

The move is part of a major consolidation of Citigroup's various lending units including CitiMortgage, Citi Home Equity and Citi Residential Lending under the CitiMortgage name, a restructuring plan officially announced 2008-03-07.

Citi Residential is the remnant of ACC Capitol Holdings (including wholesale subsidiary Argent) acquired by the investment bank in February of 2007. In a 2008-01-08 NY Times article, the purchase was likened to "catching a falling knife", but the reorganization is seen "as a natural outgrowth of the deal." From an excerpt:

"It is not going to be a subprime shop," said Jeffrey A. Perlowitz, the head of the global securitized markets division of Citigroup's investment bank at time time. "It is going to be a nonconforming shop and we are going to originate along the continuum, from jumbo loans to Alt-A to subprime."

Citing a memo sent to Citi employees, the article reports the appointment of Bill Beckmann to oversee "the creation of an end-to-end U.S. residential mortgage business that includes origination, servicing and capital markets securitization execution."

"In this role, Bill will work closely with Jeff Perlowitz, the CMB head of Global Securitized Markets (GSM), to determine how to best integrate Citi Residential Lending's origination and servicing functions and those in CitiMortgage."

News will continue to come in, and we will provide updates as more accurate information becomes available. Contact us if you can provide more details.