The strategic plan is aimed at simplifying CitiMortgage’s operations, reduce expenses, and improve returns on capital.
As part of the plan, it has signed an 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 to New Residential Mortgage (NRZ).
The sale, which is subject to the approval of both agencies and the FHFA, is expected to be completed in the first half of 2017.
For the remaining Citi-owned loans and certain other mortgage servicing rights not sold to NRZ, Citi has entered into a subservicing agreement with Cenlar FSB.
Loan servicing on these assets are expected to be transferred to Cenlar beginning in 2018.
CitiMortgage president and CEO CD Davies said: “Over the past several years, we have made significant progress transforming our business to deliver a sustainable annuity of growth.
“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.”
Citi said that it is working to transfer as many employees as possible along with the mortgage servicing rights and operations.
The transactions are expected to negatively impact pre-tax results by approximately $400m in the first quarter of 2017.
In October 2014, the lender announced plans to close consumer banking businesses in 11 countries in order to focus on markets with high growth potential, simplify operations and boost profits.
Image: Citigroup Centre, Sydney. Photo courtesy of Paulscf/Wikipedia.
