Citi Marks $2bn of TARP Funds for Warehouse Lending

Citigroup (C) approved two new initiatives during Q209 that will operate under the Troubled Asset Relief Program funding. The initiatives, totaling $6bn in funding, include a lending facility for mortgage originators. The program allocates up to $2bn for Citi to fund financing to mortgage loan originators via warehouse lending facilities. Citi said it will provide originators with collateralized lines of credit that are backed primarily by residential mortgages which are eligible for sale to government-sponsored mortgage agencies. The bank also approved up to $4bn for municipal letters of credit to provide direct lending to municipal clients. Both programs are TARP-supported initiatives that are closely monitored to ensure funds are put to work prudently, transparently and according to clear guidelines. With the $6bn in new initiatives during the quarter, the aggregate value of programs supported by TARP capital is up to $50.8bn as of June 30. At the close of the second quarter, Citi has put to work $15.1bn of that total, or nearly one third. In addition to the lending programs, Citi said it will continue to aid at-risk homeowners and has already helped 625,000 US homeowners avoid potential foreclosure on mortgages totaling more than $67bn since the onset of the foreclosure crisis in 2007. Citi helped 108,000 borrowers with mortgages worth $16bn in Q209 alone. Citi’s move to increase warehouse funding comes at a time when warehouse lenders are becoming scarce. Of those that remain, a major warehouse lender recently faced a federal probe as regulators look for more transparency in mortgage lending. GMAC Financial Services announced last week it will step up its correspondent and warehouse lending volume, although it gave no dollar amounts at the time. Write to Diana Golobay. Disclaimer: The author held no relevant investments when this story was published.