HousingWire.com (a terrific real estate news resource) reported that Citi has stopped accepting mortgage applications from mortgage bankers this week.

>A spokesperson confirmed to HousingWire the company entered the temporary suspension over “quality control” issues surrounding documentation of appraisals or income verification seen in — or missing entirely from — previous mortgages purchased through the channel.

In other words, up until this past Tuesday, mortgages applications were still being processed without appraisal and income verification docs. It doesn’t necessarily mean that their loans aren’t being closed without these documents, but for this activity to be suspended and their massive size, things must have become very serious. Disturbing.

>Citi is encouraging its correspondent clients to take the time to also review documentation processes to ensure the quality of loans originated for the lender to purchase.

Ok, so Citi has to tell the companies that submit loan packages to actually review them? Thats like a book publisher reminding an experienced book author to spellcheck.

CitiMortgage uses about 5 different appraisal management companies to handle their appraisal ordering and review process nationwide. Combine that with missing appraisal docs from mortgage applications submitted by mortgage bankers and you’ve got worries.

I’m not singling out Citi here (yet it is surprisingly easy) but the state of the national retail bank mortgage lending process is still being run by the same people that ran them during the credit boom. Plus all national retail banks almost exclusively rely on appraisal management companies for their appraisal services.

I am hopeful they have the wear-with-all to get it right. Mets fans are worried too.


7 Comments

  1. VP June 25, 2009 at 6:06 pm

    Citi:the home of FAIL

  2. Wonk Room » The WonkLine: June 26, 2009 June 26, 2009 at 10:36 am

    […] notes that “quality control issues” have temporarily stopped Citigroup from accepting mortgage applications: “In other […]

  3. afisher June 26, 2009 at 1:30 pm

    Just another reason this “to big to fail” company needs new management…as it appears that the current (same as past) has not resolved any of the problems that placed them on the brink of failure.

    As Bank of America has its own appraisers and processors, one could suspect that Citi has a similar process to keep all the money in one bucket…and the hole in the bucket has not been fixed!

  4. Links For Today » The Ethereal Voice June 26, 2009 at 6:01 pm

    […] Citi has stopped accepting mortgage applications from mortgage bankers. Among the issues is appraisals which is supposedly the issue that is stooping the sale of a house near us. […]

  5. Edd Gillespie June 27, 2009 at 11:36 am

    Doesn’t this revelation confirm what any of us working in mortgage appraising knew from experience was going on?
    I guess we care, but can we find anybody who cares who will and can do anything about it?
    I’d like to know what moved Citi to change its policy. Given the circumstances I suspect they are just throwing up smoke screen. I don’t believe they really just discovered faith in appraisals.

  6. Zephyr June 28, 2009 at 11:34 am

    Citi has the wherewithal to get it done.
    What they lack is good managment and leadership.

    The fact that they had so many mortgages lacking important douments shows that they continued to purchase such poorly-documented loans from the sources that were sloppy. They should have ceased using those sources right away. This is a failing by Citi – not the brokers who sold what Citi would accept.

  7. Magnetic Material July 16, 2009 at 11:31 pm

    I don’t believe they really just discovered faith in appraisals.

Comments are closed.