Citigroup suffered a $9.83 billion fourth-quarter loss tied largely to mortgages, also plans to fold its Citi Home Equity and Citi Residential Lending businesses into its existing CitiMortgage Inc unit.
Citigroup and other lenders nationwide have been curbing mortgage risk as the housing slump deepens and credit markets tighten, weighing on profitability and share prices. Merrill Lynch on Wednesday announced plans to shut down its subprime mortgage unit, cutting 650 jobs.
Citigroup plans to reduce by about one-fifth over the next year its roughly $213 billion U.S. consumer mortgage portfolio, largely by running off existing
It also plans by the third quarter to sell to Fannie Mae and Freddie Mac, or package into securities, 90 percent of home loans it makes, up from 65 percent in 2007.
Citigroup will also further tighten underwriting, though it will still offer sub-prime mortgages and home equity loans, unlike rivals that have stopped as default rates soared.
Savings will result from an unspecified number of job cuts, the consolidation of technology and operating platforms, and combining sales staff, CitiMortgage President Bill Beckmann said. The mortgage units employ about 13,000 people, he said.