Citigroup Inc., the fifth-biggest U.S. home lender, will eliminate about 500 jobs as it reduces reliance on independent brokers to originate new mortgages.
The network of mortgage brokers will shrink to about 1,000 from 9,500, said Mark Rodgers, a spokesman for the New York-based bank. The job cuts, mostly sales and support positions, will be completed early next year, he said. The cuts represent about 5 percent of all employees in Citigroup's mortgage operations.
Citigroup is scaling back after new-mortgage volume fell by half from a year earlier to about $31.9 billion in the second quarter, based on data from National Mortgage News.
The brokers being retained were identified through ``the application of decision analytics,'' Rodgers said. ``This new model is dependent on doing business with the right brokers via a low-cost, high-touch approach.'' He declined to say whether brokers were screened based on the number of their loans that later went delinquent.
The use of independent brokers -- known as the ``wholesale'' mortgage business -- is one of several ways Citigroup generates new loans, Rogers said. The other channels include lending through branches and Smith Barney financial advisers as well as purchasing loans from independent mortgage companies.
The job cuts in the wholesale mortgage business will be made ``across the country,'' he said, with remaining operations based in St. Louis and Dallas.
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