Citigroup Reverses Course on Correspondent Lending

Citigroup -- which has whittled down its third-party lending programs severely over the past year -- is changing course, at least when it comes to correspondent loan production. It a recent interview with Bloomberg, Sanjiv Das, who heads the lender's U.S. mortgage business, confirmed that CitiMortgage, O'Fallon, Mo., will ramp up its purchase of mortgages underwritten by other companies and keep more loans on its balance sheet. Two months ago National Mortgage News reported that CitiMortgage had been selectively contacting certain high performance loan brokers with the idea of expanding its wholesale business. According to the Quarterly Data Report, CitiMortgage bought $3.2 billion of home mortgages through the correspondent channel in the fourth quarter, a stunning 69% decline from 4Q08. Among correspondent buyers, CitiMortgage ranks sixth nationwide but was the only top 10 buyer to post a huge decline in 4Q. (A year ago CitiMortgage cut back its broker network significantly.) Now, based on what Das told Bloomberg, it appears CitiMortgage has changed course on correspondent lending. "We decided that we can't have a consumer bank without a mortgage product," Das said. "Then, we said, 'let's now start to grow this business back in a high-quality way.'"