Regulators criticise Citicorp Mortgage

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The Independent Online
THE home mortgage business of Citicorp, the US banking group, has come under heavy criticism from the country's regulatory authorities. They have called for management action to correct what they see as inadequate supervision and lax credit risk controls at the bank's Citicorp Mortgage Inc unit.

The criticisms were made in a report from the Comptroller of the Currency that was leaked to the New York Times and Wall Street Journal. A spokesman for the Comptroller's office yesterday declined to confirm or deny the details of the report, saying that all such examiners' reports are confidential. He confirmed that the office has a team of officials who look at the books of Citibank and other banks as part of a continuing process of supervision.

Among the criticisms levelled at Citicorp in the leaked report were that it aggressively chased volume in the home mortgage market by neglecting credit quality considerations. This had led to mortgages being given to poor credit risks, which in turn caused bad loan levels on its books to run well above the national average for mortgage lending.

The report also noted that these bad loans had eaten away at the capital of Citicorp Mortgage, leaving it with virtually no resources, despite a dollars 172m (pounds 86m) equity injection earlier this year.

In a statement, Citicorp said the leaked report was 'already outdated' and 'simply one of many working documents that typically apply to one of our periodic regulatory audits'.