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CitiMortgage Wholesale Lending - Prime, Agency



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Update - 2009-06-23: Citi has informed its Correspondent Lender clients of an 8-day suspension of new loan registrations while it "re-engineers" its QC process, citing numerous file deficiencies.

"CitiMortgage has taken great measures through our Star Performance program to focus on the quality of loans we purchase. While this program has been successful, there remain key areas that sometimes fall short of our quality control process."

The list of shortfalls is nothing short of egregious, including missing pages of credit reports, missing income or asset documentation, and appraisals either incomplete or lacking in methodology.

New loan registrations will resume on 2009-07-06 subject to more stringent review, and purchases will continue in the interim. The memo goes on to reiterate Citi's commitment to Correspondent business:

"This brief stay will provide us with the necessary time to reengineer our critical control processes and ensure, going forward, all quality control measures are passed, which will allow us to continue to be a long-term recognized Industry investor."

One Lender we spoke with had three hours notice to lock their loans, or have them returned. AE's were forced to tell Brokers they could not accept any Conventional Conforming loans, usually the bread-and-butter of the industry. It leaves one to wonder at what point did Citi suddenly realize these critical components had been routinely missing from loans they had purchased -- and for how long.

Update - 2009-01-23: We had heard rumors earlier in the week that Citi would be cracking down on some third-party correspondent lenders, but the way it seems to be being handled is going to hurt a lot of correspondent/conduit lenders, as well as their respective broker clients and borrowers.

Apparently, one of the first victims was Just Mortgage, Inc., added to our Ailing/Watch list today. As we have it from an inside source, they were told in a conference call on Thursday, 2009-01-22, that Citi would not be honoring any locks or funding any TPO's effective immediately. The result of that was thousands of locked and some even funded loans that had not yet been shipped for purchase became suddenly undeliverable to Citi. Just Mortgage and their brokers were forced to scramble to resubmit and re-lock with other investors, and absorb the loss in worst-case pricing.

Posted on a discussion thread about Citi, one correspondent broker (company not identified) added this in confirmation:

"As a customer, we can confirm that Citi has indeed stopped purchasing any corr loans originated via tpo. This applied immediately, including even locked and funded-but-not-purchased loans."

One forum poster indicated Citi had instituted a "grading scale" to weed out its client base in an effort to improve performance:

"Not all correspondent lenders got cut off by Citi. Citi developed a scorecard that analyzes 10 or so factors and each correspondent is graded.

We'll be watching closely as this plays out for other correspondents who were dependent upon Citi as their TPO investor. Citi has every right to make efforts to improve the profitability of their business channels, but to do so by cutting off clients with no forewarning and refusing to honor locks or purchase funded loans strikes us as an incredibly callous and highly unprofessional business practice in its application. As one one of the above posters stated, "This unannounced move by Citi [could] well put other companies out of business immediately."

With Chase backing out of Wholesale, Citi axing without warning, and rumors of Wells to follow suit, the mortgage industry from the Broker to the Investor level is suffering a loss of faith (and trust) from the top down.

Perhaps someone let go of the wheel while passing the reins; Derr, Thomas Rubin out... Parsons coming in... the vivisecting of the company... the resulting fallout surely will be considered a mistake in the near future. We can see no upside to Citi's actions.

Update - 2008-10-07: Several of the letters sent to brokers by Citi AE's refer to a decision to downsize the company's existing base of 9,500 brokers nationally to just 1,000 "strategic partners." The notices began to roll out to those 8,500 broker shops late this afternoon, suspending Citi's broker agreements effective Friday, October 11th. View a copy of one such notice here.

Original Ailing Listing - 2008-10-07: Emails are coming in from all over the country that CitiMortgage is closing it's Wholesale Lending division. AE's are sending out messages to Brokers saying goodbye, or calling to say they were let go today.

"CitiMortgage has announced today that it has made the decision to re-structure it's Wholesale business model by continuing the Wholesale Division without local account representation. Our nationwide sales efforts will be handled by an inside group of dedicated individuals committed to bringing the best products and services to our valued brokers."

In the 'now typical' fashion of closing shop, it appears first Lenders let go the outside reps and tell everyone you are moving to an 'in-house' system. In reality this has turned out to be "the clean-up crew" more often than not. It seems like Citi has done this in the past with First Collateral Services, and their Home Equity division.

"Citimortgage closes wholesale" came in from one AE, but on a conference call today, Citi says the entire outside sales team including management will be let go (last day will be Friday) except for those they keep for their "tele-sales" business.

From a tip:

"Citi is drastically restructuring our wholesale operations, moving to a call center approach and scaling back from 9,500 approved wholesale brokers to 1,000 brokers. All outside AEs are losing our positions and the remaining brokers will be serviced through call centers out of Dallas, TX, Ann Arbor, MI and St Louis, MO. All brokers will be notified this afternoon if business will end or if you are able to continue to work with Citi under the new structure."

We'll post more information as it comes in... join in our Discussion Forum for updates throughout the day.

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Alexius12 at 13:34 2008-10-07 said:
DEADMAN WALKING, as I stated in 11/07 Citicorp is having severe financial problems, cutting down jobs since last year, and had to resort to selling out to Abu Dhabi, the largest emirate in the United Arab Emirates, a large portion of the company at double the interest Citigroup offers bond investors (11% return). Non transparency on its reporting CDOs, and is the subject of several ongoing state agency investigations. High on credit- swaps linked now defaulted loans that need to be accounted for. Highly leveraged on IOU pools poorly securitized. Permalink
Anonymous at 15:56 2008-10-09 said:
DELETED Permalink
shelley318 at 16:40 2008-11-06 said:
I worked for Citi for 7 years & left when they started building up the home equity dept to an inappropriate & monsterous size. It didn't feel right then & I was proven right when everything there in that dept collapsed. Permalink
mortgagepro2008 at 17:17 2008-12-13 said:
All new submissions are done after 12-19-08. Not sure how long they will allow the active pipeline deals to be worked. But, it is official Citi mortgage is out of the wholesale business. Looking more and more like all of us will be either working for a Bank or getting out of the business altogether. Permalink
SteveP at 12:57 2009-01-23 said:
Too bad Citi didn't eliminate TPO's several years ago, if they had, they wouldn't have required such an expensive bailout from us taxpayers. And too bad they purchased Ameriquest which was nothing but a platform for fraudulent loan originations. The FDIC needs to stop insuring institutions that accept TPO processed mortgages. Permalink
NYMortgageBroker at 08:31 2009-03-09 said:
I worked with Citi two years ago... when the implosion was began... They took four months to fund a small loan to a client of mine that worked at Chase... They lost the file, re-lost the file.. The Chase guy closed and was our last loan, they cancelled us for complaining to their corporate offices.. ( we did write three letters, and request they find a new rep for us - fair enough) their corporate offices closed rank.. and happily ignored the four month episode. They allowed Citi to cancel us.

Who didn't close: They refused to honor FannieMae findings on a minority borrower who worked two jobs as a nurse... They touted flyers paying a discount of 50 basis points to any loans in locations designated low income housing... because they were always under their quota of lending to low income regions...

Then they were just plain rude when a pre-approved FannieMae loan was sent in... positive "findings" attached (which meant they were supposed to buy it as per their seller servicer agreement with Fannie).

Basically if Fannie will approve it.. based on a superior underwriting system and likely using national not regional criteria.. then the sellers /servicers should accept it. Well they didn't.

I like when lenders like the clients they are purporting to service and help. Citi had an unfriendly group and were above it all - and the poor woman never got her loan. Our own office replaced three windows in the rear of her house to make the house up to citi's standards, but they refused the loan. The new windows unreimbursed to my partner- $2000

The end of the mean wholesale team at Citi - Priceless.

The Citi team from the 80s was phenomenal... professional... and a bit older in age.... However this group was a rude yuppie set of people and those people are gone in banks everywhere.... I don't care about the backlog.. I cared about the rudeness, the lack of corporate responsiveness, and the indifferent / spiteful personalities.. and how it affected a few clients.

Banking is about housing and housing should include slowing down and helping a first time home buyer in the city, and a two job grandmother in a low income house, that luckily got approved by FNMA.... If it's not.. it's too big for it's britches! and it was. Permalink

Lisa11 at 05:24 2009-04-04 said:
Non transparency on its reporting CDOs, and is the subject of several ongoing state agency investigations. High on credit- swaps linked now defaulted loans that need to be accounted for. Highly leveraged on IOU pools poorly securitized.

Lisa11 Permalink

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Important: This company is on our list of lending operations that are apparently ailing or which we think are worth watching for any other reason. We make no representation or claim that any company on this list will or will not continue as a going concern, or change in any other way, adverse or beneficial. If you have concerns about this company, we suggest contacting them directly and/or checking with other reliable sources.