Citi's mortgage revenue rises as business continues to shrink

Citigroup's first quarter mortgage-related revenue increased compared with the fourth quarter — although down slightly from the same period last year — as its lending operations continued to contract.

The combined net servicing and gain on sale revenue totaled $31.8 million, up 24% from the fourth quarter's $25.6 million, but down 5% from $33.4 million in the first quarter of 2018. In the first quarter of 2017, before Citi reduced its mortgage footprint, its mortgage revenue was $63.1 million.

Citing the new capital rules under Basel III, Citi sold most of its mortgage servicing rights to New Residential in 2017. Its portfolio of loans serviced for other investors continued to shrink throughout 2018.

As of March 31, the portfolio had $44.9 billion in MSRs, down from $45.2 billion at the end of the fourth quarter and $46 billion one year prior.

There were $269 million of mortgages past due between 30 and 89 days and $179 million over 90 days late on their payments at the end of the quarter that were not guaranteed by a government-sponsored agency. Additionally there were $71 million of loans past due 30 to 89 days and $163 million that hadn't made a payment in 90 days or more that where the loss predominantly resides with a government agency, Citi said in a footnote to its earnings supplement.

In February 2018, Citi combined what was left of its mortgage business with its retail banking unit.
Citi originated $2 billion in the first quarter, compared with $2.3 billion for both the fourth quarter and the first quarter of 2017.

There were $1.1 billion of saleable mortgage rate locked loans as of March 31, compared with $900 million on Dec. 31, 2017 and $1.2 billion at the end of the first quarter last year.