Citigroup Inc suspended loan applications at its CitiMortgage correspondent lending division, citing quality control issues as the problem. The correspondent lending division buys closed loans from mortgage bankers which it services, and may securitize and/or sell to Fannie Mae and Freddie Mac CitiMortgage stopped taking in loans on Tuesday evening, but plans to restart accepting loans on July 6th. Specifically, Citimortgage said the quality control issues were related to appraisal reports and income verification documents.
These quality control issues are critical as they may affect CitiMortgage's ability to inforce the terms of the mortgage note, the ability to securitize agency eligible product, and sell the loans into the Secondary Market. The entire mortgage lending industry is cleaning house. Quality control processes are critical to providing transparency and accuracy of data at the loan detail level. CitiMortgage should be commended on its commitment to provide investment quality securitized product at any cost.
Interest Rate Update 6/24/09:
New home sales, 5Yr Treasury auction, and comments expected from the Fed about the economy today. Prices opened a little flat but could move either way today:
Conforming Conventional 30Yr Fixed 5.750%
Conforming Conventional 15Yr Fixed 5.250%
Conforming Conventional 5/1 ARM 4.750%
Conforming Conventional 5/1 IO ARM 5.125%
Jumbo 5/1 Arm 5.625%
Jumbo 30Yr Fixed 6.625%
FHA 30Yr Fixed 5.750%
FHA 5/1 ARM 4.875%
US Rural Housing 30 Yr Fixed 5.500%
* Above Conventional rate quotes are as of 6/24/09 on a Conventional $250,000 loan amount, primary residence at 80% loan to value, with a 720 FICO score. APR includes $1,200 in lender fees and 980 in title charges (title charges may vary). FHA Quote assumes a $150,000 loan amount and a 680 FICO score, and a 96.5% LTV. Jumbo quote assumes a 75% LTV and 680 FICO score. Documentation of income and assets required. No origination or discount points.
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