Subservicing

Citigroup's decision to exit mortgage servicing by the end of 2018 is part of a long-term strategy to increase returns and sharpen the bank's focus on its core retail customers.

Citigroup's plans to sell a $97 billion mortgage servicing portfolio and subservice its remaining accounts highlights the growing prevalence of nondepository servicers and raises questions about how much capacity exists for these institutions to absorb more large deals.

New Residential Investment Corp. is planning a public offering of more than 49.2 million shares of its stock to pay for its purchase of mortgage servicing rights from CitiMortgage.

Citigroup plans to exit the mortgage-servicing business by the end of 2018 to focus on making new loans.

Nonbank servicers should proactively ask for guidance on the Consumer Financial Protection Bureau's muddled private-label servicing policies, as they are likely to soon be under scrutiny.

PHH is selling its remaining residential mortgage servicing portfolio to the real estate investment trust New Residential.

PHH Corp. plans to close a Buffalo, N.Y.-area office next year, which will result in the layoff of 80 employees, extending the staff reductions already taken in 2016.

While nonbank servicers are expected to continue to gain greater market share in 2017, much of that growth will come from their own loan origination activity rather than mortgage servicing rights purchases and subservicing, according to a report from Fitch Ratings.

PHH Corp. is getting out of the private-label mortgage origination business in the wake of Merrill Lynch ending its relationship, plus it is selling its Ginnie Mae servicing rights to Lakeview Loan Servicing.

By decreasing costs through technology, outsourcing and scale, servicers not only can give their margins a much-needed boost, but also set themselves up to reap rewards in the future.