Citi Posts Earnings of $3Billion
Citigroup Inc. said Monday that it pulled in net income of $3.0 billion for the first quarter of 2011. The bank’s profit declined $1.4 billion from the first quarter of 2010, but more than doubled compared to the final three months of last year. Even with the year-over-year drop, the lender’s Q1 earnings beat analysts’ expectations. Citi reported that the company’s net credit losses declined 25 percent from a year earlier to $6.3 billion, as credit quality continued to improve for the seventh consecutive quarter.
Ginnie Announces New Policy for Pooling Loans
Ginnie Mae, which provides a guaranty on mortgage securities backed by Federal Housing Administration loans, has announced a new policy regarding the pooling of past-due loans. For single-family securities with an issue date of June 1, 2011, and after, servicers can no longer package loans that are delinquent by more than the monthly installment of principal and interest that is due on the issue date. This fall, the federal agency will also begin requiring issuers to supply new data elements, such as loan-to-value ratios and pre-modification qualities.
S&P Blames Fannie and Freddie for Negative Outlook
The headline business news Monday was Standard & Poor’s notice that its outlook for the United States has turned negative. The agency maintained its AAA rating but warned that there is a one-in-three likelihood the long-term rating could be lowered over the next two years. The main culprit is the nation’s growing debt and discord in Washington over the budget, but the agency also cited outlays to mortgage giants Fannie Mae and Freddie Mac as a substantial risk, warning that taxpayer support for the two firms could go as high as $685 billion.
Maxine Waters Joins the Reform Bandwagon
Mortgage servicing practices have taken center stage on Capitol Hill, with a flurry of bills being penned to make servicing reforms the law of the land. Rep. Maxine Waters of California has revised a bill she’s brought to the table several times before that would compel lenders to engage in what she says are “reasonable loss mitigation activities” for all delinquent homeowners. The legislation would place responsibility for modifying first and second liens with the servicer of the primary mortgage and would institute several reforms outlined in recent settlements with regulators.
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