Posted by Jonathan J. Miller -Thursday, June 25, 2009, 4:36 PM
HousingWire.com (a terrific real estate news resource) reported that Citi has stopped accepting mortgage applications from mortgage bankers this week.
A spokesperson confirmed to HousingWire the company entered the temporary suspension over â€œquality controlâ€ issues surrounding documentation of appraisals or income verification seen in â€” or missing entirely from â€” previous mortgages purchased through the channel.
In other words, up until this past Tuesday, mortgages applications were still being processed without appraisal and income verification docs. It doesn’t necessarily mean that their loans aren’t being closed without these documents, but for this activity to be suspended and their massive size, things must have become very serious. Disturbing.
Citi is encouraging its correspondent clients to take the time to also review documentation processes to ensure the quality of loans originated for the lender to purchase.
Ok, so Citi has to tell the companies that submit loan packages to actually review them? Thats like a book publisher reminding an experienced book author to spellcheck.
CitiMortgage uses about 5 different appraisal management companies to handle their appraisal ordering and review process nationwide. Combine that with missing appraisal docs from mortgage applications submitted by mortgage bankers and you’ve got worries.
I’m not singling out Citi here (yet it is surprisingly easy) but the state of the national retail bank mortgage lending process is still being run by the same people that ran them during the credit boom. Plus all national retail banks almost exclusively rely on appraisal management companies for their appraisal services.
I am hopeful they have the wear-with-all to get it right. Mets fans are worried too.