A little over a week after the Consumer Financial Protection Bureau (CFPB) announced that it is fining two Citibank mortgage servicing units – CitiFinancial Servicing and CitiMortgage Inc. – for “giving the runaround to struggling homeowners seeking options to save their homes,” Citigroup Inc. today announced plans to exit the mortgage servicing business by the end of 2018.
To help it make the transition, Citi has announced that New Residential Investment Corp. has agreed to buy the mortgage servicing rights on a portfolio of Fannie Mae- and Freddie Mac-backed loans with about $97 billion in unpaid principal balance for about $950 million, Bloomberg reports.
In addition, Citi has reached a deal with Cenlar FSB to service its remaining mortgages, Bloomberg reports. The bank plans to transfer the rights for those loans beginning in 2018.
The sale to New Residential, which is subject to regulatory approval, is expected to be complete in the first half of 2017.
Citi says in a statement that the agreements will reduce pretax results by about $400 million in the current quarter. Expense benefits will start to accrue in 2018.
“The strategic action is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital,” the bank says in its statement.
Citi has agreed to pay $28.8 million to settle the allegations brought by the CFPB.
According to Citi’s fourth-quarter earnings statement, its total mortgage servicing rights portfolio was worth about $1.6 billion as of the end of last year – down from $6.5 billion at the end of 2009.