CitiMortgage is slashing the number of mortgage brokers it does business with -- leading to hundreds of layoffs. Business from a smaller and more productive group of brokers will ultimately be channeled through offices in Missouri and Texas.
The O'Fallon, Mo.-based lender is cutting off some of its mortgage brokers, spokesman Mark Rodgers told MortgageDaily.com in an interview. He could not reveal which brokers are being cut or how exactly the company is determining this, but he did note that the brokers they are keeping tend to be those with the higher quality loans and higher volume.
"In the current challenging environment, we are redefining the wholesale business model to work with a smaller, targeted group of brokers," Rodgers said in a written statement.
This is the second time Citi has scaled back on its broker relationships.
In 2001, following its acquisition of Associates First Capital Corp., CitiFinancial severed relationships with more than 1000 mortgage brokers.
"Ultimately our wholesale business will be fulfilled though our sites in St. Louis and Dallas," Rodgers explained in the statement.
Around 500 employees will be laid off nationally as a result of the latest cutbacks, he said. The impacted jobs include a number of work-from-home positions and disbursed-sales positions.
The affected employees are in Colorado, Georgia, Michigan, Missouri, Ohio and Texas.
A message to brokers from one of the company's wholesale account executives based in the West indicated that the Citigroup subsidiary notified her as of 8 a.m. this morning and her last day is Friday. She had indicated that the entire wholesale business was closing -- a claim disputed by the spokesman.
"We are significantly reducing the amount of brokers that we deal with in the wholesale channel so we simply are not going to need as many sales and operations people as we currently have," Rodgers stated.
He added that impacted employees will receive counseling, support services and severance packages as appropriate. Some will be encouraged to apply for other available Citi jobs in their area.
The layoffs follow 146 employees who were displaced in August when CitiMortgage closed a wholesale operations site in Des Moines, Iowa.
The moves are part of a plan announced in April 2007 to reduce headcount by 17,000.
Citigroup, which is currently battling with Wells Fargo & Co. over the acquisition of Wachovia Corp., reported more than $7 billion in losses for the first half of this year and said fourth-quarter 2007 losses were nearly $10 billion.