The California Public Employees' Retirement System (CalPERS) this week suspended its mortgage program, citing rising delinquencies and declining usage by its target audience: state workers. The program's administrator is Citigroup.
The Member Home Loan Program (MHLP) allowed state workers to buy a home with no money down and/or borrow against their retirement contributions.
The official suspension notice came on Monday but the CalPERS board was set to further discuss the issue at a board meeting scheduled for Wednesday.
Since its inception 29 years ago, the CalPERS mortgage program facilitated the origination of almost $23 billion in residential product.
According to Yale Bertolucci, a mortgage banker who has funded MHLP loans for several years, Citigroup bought the loans and serviced them.
But he blames both Citi and CalPERS for slowly dismantling the program over many years by tightening underwriting standards.
"A year ago they got rid of the nonconforming jumbo loan option," he said. "It's too bad because this was a real benefit for state workers. They could borrow against their retirement money to get into a house."
Cameron Watts, a CitiMortgage correspondent official involved in the program, could not be reached for comment.
According to a statement from CalPERS, since 2004 the program has averaged between 1,000 and 4,500 loans per year. Over 29 years, roughly 136,000 mortgagors were served by MHLP.
CalPERS has 1.6 million members and retirees.