Citigroup plans to exit mortgage servicing by end of next year

[NEW YORK] Citigroup Inc plans to exit the mortgage-servicing business by the end of 2018 to focus on loan origination.

The company reached an agreement to sell the servicing rights on loans with US$97 billion of outstanding balances to New Residential Mortgage LLC, the New York-based company said Monday in a statement.

Citigroup expects the move to reduce pretax results by about US$400 million in the first quarter of 2017. Expenses benefits will start to accrue in 2018, according to the bank.

"The strategic action is intended to simplify CitiMortgage's operations, reduce expenses, and improve returns on capital," the company said in the statement.

The sale, which includes 780,000 loans, is expected to be completed in the first half of 2017.

BLOOMBERG