Citigroup Reporting Higher Redefaults on Loan Mods

Citigroup is reporting a higher redefault rate on home loans it has modified and signs of heightened risk in its servicing portfolio. In a new report Citi said the redefault rate in the third quarter on its $746.8 billion servicing portfolio did not exceed 39% for loans modified between the second quarter of 2008 and the second quarter of 2009. That rate — the percentage of borrowers who become delinquent 60 or 90 days after modification — was higher than Citi's redefault rate in the second quarter, which did not exceed 29%. Still, Citi's third-quarter redefault rate was lower than the industry average of roughly 50% reported in September by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Sanjiv Das, the chief executive of Citi's mortgage unit, said in an interview that economic trends are working against industry and government efforts. "People are just not able to keep up with all their different kinds of debt, and they take what they can get from the bank in terms of modification, but after six months they go back to redefaulting," he said.