(Reuters) - Citigroup Inc (C.N) said on Monday it would speed up the transformation of its U.S. mortgage business by exiting servicing operations by the end of 2018.
Citi said it would sell its mortgage servicing rights on about 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers to New Residential Mortgage LLC (NRZ).
The remaining Citi-owned loans and other mortgage servicing rights not sold to NRZ are expected to be transferred to loan servicing provider Cenlar FSB [CENLR.UL] in 2018.
The lender said it expected these deals to hurt first-quarter pretax results by about $400 million, including a loss on sale and certain related transaction costs.
The move is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital as the company focuses on mortgage originations.
CitiMortgage services mortgage loans for Citibank and government-sponsored entities such as Fannie Mae and Freddie Mac.
Citigroup’s mortgage units, including CitiMortgage, were fined $28.8 million last week for keeping home borrowers in the dark about options to avoid foreclosure and making it difficult for them to apply for relief.
Reporting by Nikhil Subba in Bengaluru; Editing by Martina D'Couto