Big Banks Leave Black Hole in Correspondent Lending

Big Banks Leave Black Hole in Correspondent Lending

The competition for the exits is intensifying among big banks that purchase mortgages from correspondent lenders, producing liquidity dilemmas for loan originators and radically reshaping home loan servicing.

Citigroup Inc. told correspondent loan providers this that it will no longer purchase “medium or high-risk” loans that could result in buyback requests from Fannie Mae or Freddie Mac month. That pullback uses giant loan purchasers Bank of America Corp.