From the New York website: Citigroup is leaving the mortgage servicing business amid declining revenues and stricter regulations.
The bank agreed to sell the right to service $97 billion in securitized residential loans backed by Fannie Mae and Freddie Mac to New Residential Investment Corporation for $950 million. In a separate deal, Cenlar FSB said it would take over the servicing of all remaining mortgages. Citigroup expects to have completely exited that business by 2018.
Mortgage servicers collect payments and manage foreclosures on behalf of mortgage bondholders in return for fees. But Citigroup’s servicing fee income has been dropping steadily in recent years, from more than $1.6 billion in 2009 to less than $600 million in 2015, according to Bloomberg.
“The strategic action is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital,” Citigroup said in a statement.
Earlier this month, the bank agreed to pay $28.8 million in fines over allegations that its mortgage servicing business misled homeowners.
As banks increasingly exit the mortgage servicing business, non-banks increased their market share to 24 percent in 2015, from 6.8 percent in 2012. [Bloomberg] — Konrad Putzier