Secondary Market, We Have a Problem

Citigroup recently told its mortgage correspondents that going forward it will only buy "low risk" loans. What's a low risk loan, you ask? Answer: any mortgage that has an almost zero chance of going south. Meanwhile, we're hearing that some major correspondent buyers – including Wells Fargo and JPMorgan Chase – are getting backed up on their secondary market acquisitions, which is causing warehouse woes for its customers. Note to firms that want to grow: this is your chance to step up to the correspondent plate. (The Citigroup story was broken by Kate Berry who works for our sister publication, American Banker. The story is on the NMN website now.) Meanwhile, on Tuesday, Daniel Mudd officially stepped down from Fortress Investment Group, which also controls Nationstar Mortgage, a fast growing subservicer. Mudd is being sued by the SEC for misleading investors about the GSE's nonprime risk. He's denied the charges. FIG's shares continue to trade under $5 each.