After announcing last week that it was selling mortgage servicing rights (MSRs) for about 64,000 Fannie Mae residential first-mortgage loans with about $10.3 billion in unpaid principal balances, Citigroup is reportedly cutting 950 jobs in its servicing division.
As per a Bloomberg News report, the bank is laying off about 200 workers in Fort Mill, S.C., and about another 50 in Hagerstown, Md., and will close both locations.
A bank official interviewed by Bloomberg News declined to say where the other 700 cuts would occur.
An additional 600 job cuts may occur by year-end in Hagerstown, with another 180 in Fort Mill, according to the report, citing an unnamed source. About 400 of the employees in Hagerstown work at home, the source told Bloomberg.
Fannie Mae acquired the MSRs from Citigroup and has reportedly transferred the servicing to Andrew Wilson Financial Services.
In recent months, other major banks including Wells Fargo, Bank of America and Ally Financial have been selling their MSRs as they sought to get out of the servicing business ahead of implementation of the Basel III regulations. Some are getting out simply because servicing now represents a shrinking part of their business.
Meanwhile, private equity firms, hedge funds and other servicers have been snapping up MSRs as they seek to get a larger slice of the $10 trillion mortgage-servicing market.