Citigroup announced this afternoon that it will cut 185 jobs in its residential mortgage unit CitiMortgage as it pulls out of the wholesale market for second mortgages amid deteriorating credit conditions.
The layoffs are part of Citi’s ongoing strategy to reduce its exposure to the residential mortgage market, which it outlined two weeks ago.
In that release, Citi said it planned to increase agency-backed lending to 90 percent of production by the third quarter, up from 65 percent in 2007, and said its CitiMortgage division had already reduced third party second-lien lending by more than 90 percent from a year ago.
The affected employees were working in the home equity division in Des Moines, Iowa, where roughly 180 workers will remain after the layoffs.
“The last day to register and lock either a stand alone second or combo is Tuesday, March 18. On Wednesday, March 19 these products will no longer be available on the Citi Home Equity Web site at www.CitiHomeEquity.com. All stand alone and combo loans in the pipeline must fund on or before May 12, 2008.”
“With this change in strategy, I do want to reiterate two things. First, home equity products are still available via Citi’s retail distribution channels. Second, CitiMortgage intends to remain an industry leader in both Wholesale Lending and mortgage lending overall and we thank you for your continued business as we work through this time in the industry together,” said Fred Bolstad, Executive Vice President of Wholesale Lending.
Shares of Citi ended the day down $1.16, or 5.86%, to $18.62, hitting a fresh 52-week low in the process.
Update: The number of layoffs involved in the closure could total roughly 500 employees.