Citigroup has announced that it has executed agreements that will accelerate the transformation of the U.S. mortgage business by exiting servicing operations by the end of 2018 to intensify focus on originations. The strategic action is intended to simplify CitiMortgage’s operations, reduce expenses, and improve returns on capital
Citi has signed a definitive agreement to sell its mortgage servicing rights, and the related servicing, on approximately 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers with outstanding balances of approximately $97 billion to New Residential Mortgage LLC (NRZ). The sale, subject to the approval of both agencies and the FHFA, is expected to be completed in the first half of 2017.
In addition, Citi has entered into a subservicing agreement with Cenlar FSB for the remaining Citi-owned loans and certain other mortgage servicing rights not sold to NRZ. Loan servicing on these assets are expected to be transferred to Cenlar beginning in 2018. As part of its assumption of the servicing obligations, Cenlar will provide core operations, customer service and default operations. Loans of Citi’s retail banking clients will be retained by Citi but will be included in the subservicing contract.
“Over the past several years, we have made significant progress transforming our business to deliver a sustainable annuity of growth,” said CD Davies, president and CEO of CitiMortgage. “CitiMortgage remains a critical part of serving our customers, deepening relationships with existing and prospective retail bank clients and driving growth in our core markets. We will continue to originate loans for current and new clients.”
