The contracts, held in the Citi Holdings unit, are tied to loans with about $10.3 billion in unpaid principal balances, the New York-based bank said today in a statement. Fannie Mae acquired the rights and will transfer the servicing of the loans to another firm, Andrew Wilson, a Fannie Mae spokesman, said in a phone interview. Terms weren’t specified.
“This transaction advances Citi’s ongoing objective to reduce assets and expenses within Citi Holdings and more efficiently aligns Citi’s mortgage servicing operations with current business needs,” the bank said.
Citigroup had reduced assets in the Citi Holdings portfolio to $122 billion at the end of September. The bank was selling servicing rights on $63 billion in loans in October, people briefed on the offer said at the time. Mark Rodgers, a bank spokesman, declined to comment on whether today’s deal is part of that larger amount.
As part of the transaction, Citigroup paid Fannie Mae to limit its liability related to the servicing, Wilson said. He declined to provide the amount.
The deal “substantially resolved pending and future compensatory fee claims related to Citi’s servicing practices on these loans,” the bank said in the statement.
The sale includes the majority of overdue loans serviced by Citigroup for Fannie Mae and represents almost 20 percent of the loans serviced by the firm that are 60 days or more past due, the bank said. The transfer will begin this quarter and continue into the third quarter, according to the statement.
Citigroup is scheduled to release fourth-quarter financial results tomorrow.