Citigroup To Sell $63 Billion In Mortgage Servicing Rights

Citigroup Inc., which last month agreed to pay $395 million to Freddie Mac to settle claims that the bank sold roughly 3.7 million potentially faulty mortgages to the housing finance company from 2000 to 2012, is reportedly gearing up to sell mortgage-servicing rights (MSRs) on $63 billion in loans it holds in its portfolio.

According to a Bloomberg News report, the MSRs represent about 21% of the bank's total contracts as of midyear. More than 80% of the loans are performing, according to the report, which cites unnamed sources.

In recent months, other major banks including Wells Fargo, Bank of America and Ally Financial have been selling their MSRs as they seek 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.

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