Citi’s correspondent lending division stopped accepting new mortgage applications as of 5pm yesterday after a review found some loans were missing appraisals and income-verification documents, Bloomberg reported.
The division, which produced more than half of Citigroup $115 billion in mortgages last year, is on hold until July 6, when applications will resume, though perhaps not for all current business partners.
The move is the result of a so-called “Correspondent Quality First announcement” sent out on June 22, which addressed the quality control systems at the correspondent unit and apparently found lapses.
Among the issues were valuation concerns where appraisal documentation was missing or incomplete, along with property assessment methods that were insufficient or lacking.
The review also found income calculation “errors” and missing information related to employment, rent, and credit verification; just another day in the mortgage biz…
It is believed that loans already in process will continue to be processed as normal, though they’ll probably be subject to the enhanced systems.
The hope in addressing these changes so aggressively is that loan quality improves swiftly and bad players go elsewhere.