Just over one year ago in January 2009, Citigroup determined that mortgages were no longer a core part of business future. The mortgage conglomerate essentially ceased correspondent operations mere months after significantly downsizing their wholesale division. Citi’s wholesale channel, once a business partner with nearly 10,000 mortgage brokers nationwide, severed ties with approximately 9,000 of them. When Citi’s correspondent channel deliberately and unexpectedly terminated relationships with its correspondent lending partners, it left the mortgage analysts to speculate on the company’s outlook.
According to Sanjiv Das, CEO of Citigroup’s U.S. operations, says the company has since reversed course and considers mortgages an integral part of the company’s growth. In a recent interview with Bloomberg, Das said, “In order to be full-service consumer bank we had to be able to offer mortgages to our customers … Then, we said let’s now start to rebuild this business.”
As the company begins to phase back in some correspondent lending partners, the wholesale channel has also reached out to some of their former wholesale lending partners to begin business anew. Citimortgage’s plan is step up the purchase of mortgage loans while maintaining an increased percentage in their portfolio. As the nation’s economic outlook is on the road to recovery, Citimortgage seems prepared to go along for the ride by embracing mortgage loans once again.
As the recipient of a taxpayer bailout in the amount of $45 billion in 2008, they have since repaid $20 billion to the Treasury Department. As for the remaining $25 billion, the Treasury Department converted it into 7.7 billion common shares, which are now worth $30.5 billion. The increase in the shares came on the heals of Vikram Pandit’s (CEO of Citigroup) announcement that Citigroup narrowed its net lost to $1.6 billion in 2009 and is poised to return a profit in the near future.
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