|
Where Others Fear to Tread, Citi Moves In
By Ted Cornwell
Just when many of the nation's largest subprime lenders are heading for the exits, voluntarily or not, banking giant Citigroup appears intent on growing its share of the subprime market.
At least, that's one way to read Citigroup's decision to purchase $45 billion in servicing rights from Ameriquest Mortgage. As our sister publication, National Mortgage News reported this week, the deal could put Citigroup within reach of becoming the nation's largest servicer of nonprime credit quality home loans. The deal would make Citi a $110 billion nonprime mortgage servicer, putting it within about $20 billion of Countrywide's total. Of course Countrywide, stung by heavy losses form its subprime lending, is scaling back its originations in that part of the business.
Citigroup is also buying Argent Mortgage, the wholesale lending companion to Ameriquest. Both are currently owned by ACC Capital Holdings of Orange, Calif.
Ameriquest/Argent has a storied if brief history, emerging quickly to become one of the dominant subprime lenders during the peak of the housing boom. As NMN reported, the company is said to have earned $1 billion on a pretax basis in 2005.
The company's suburban Chicago servicing center is said to be one of the industry's most technologically sophisticated.
Citigroup does not appear to be backing away from the subprime arena the way so many other lenders are. Instead, Citi seems to be positioning itself to be a major player in the field when the subprime market stabilizes.
Citi isn't the only big bank that seems to be weathering the storm well and positioning itself to gain a greater share of mortgage debt outstanding. Wells Fargo, for one, appears less likely than Countrywide to have to scale back origination or sell servicing rights to raise cash. Wells, which just last year bought a big chunk of servicing from Washington Mutual, could be positioned to once again become the largest servicer of prime credit quality loans. Already, another top bank that's among the biggest mortgage lenders, Bank of America, has taken a big stake in Countrywide by paying $2 billion for a 15% stake in the firm. Nobody is calling it a merger, but that kind of move always sparks rumors that a bigger deal could be in the works. Might Bank of America one day sit atop the mortgage kingdom as the result of a big acquisition?
Click here for an archive of stories from the MSN newsletter.
| 
