Citi to Sell or Close FCS
Citigroup, decimated by billions of dollars in writedowns on subprime assets, has decided to close its warehouse lending division, First Collateral Services, Concord, Calif.
The company has contacted investment bankers about selling the operation, said a source, but so far no official offering book has been circulated.
Citigroup did not make a public announcement on FCS but confirmed to Mortgage Servicing News that it will close the unit unless it finds a buyer.
"On Jan. 24, CitiMortgage announced the exit of its warehouse lending business through its subsidiary, First Collateral Services," it said. "Until the complete closure of the business, expected in 3Q this year, First Collateral will continue to support existing clients on a case-by-case basis in accordance with each client's contract and also work with clients on alternative solutions."
Among warehouse providers, FCS ranked about fifth, according to figures published in the Mortgage Industry Directory. Most of its clients include non-depository mortgage bankers.
FCS provided lines of credit to both prime and subprime shops. Many of its subprime clients have gone out of business over the past 12 months.
Citi is the second major warehouse provider in as many months to announce its departure from the sector. Washington Mutual of Seattle is the other.
Several bankers, including Credit Suisse and Merrill Lynch, have trimmed their warehouse divisions to the bone.
Merrill, meanwhile, has closed its Minneapolis-based mortgage conduit, Specialty Underwriting and Residential Financial, known in the industry from its acronym, SURF.
A Merrill spokesman in California did not return an e-mail and telephone call about the matter. Jamie Willeck, the managing director in charge of SURF, left several months ago, according to a receptionist at Merrill's Minneapolis office. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/