Citigroup repurchased 6,800 residential loans in 2011, an 80% jump from 2010 with Fannie Mae and Freddie Mac accounting for the lion's share of those buybacks, according to figures released Tuesday.
Citigroup realized $200 million of losses due to the buybacks in the fourth quarter, compared to $226 million in 3Q11.
Citigroup chief executive officer John Gerspach noted that the bank has set aside $30.1 billion in loan loss reserves with $10 billion of that allocated to cover possible charges on North American mortgages.
"Mortgage-related issues are the single largest source of risk facing the U.S. banking industry," Gerspach told investors during a 4Q11 earnings conference call.
Meanwhile, the nation's fourth largest lender funded $21.1 billion of home mortgages in 4Q, an 18% gain from 3Q11, but down 3% from the fourth quarter of 2010.
Overall, Citigroup originated $63.2 billion of single-family loans in 2011, a slight increase from the year prior.
Citigroup executives noted that since 2008 its mortgage division has steadily reduced its dependence on FHA mortgages. Back then CitiMortgage accounted for 7% of all Federal Housing Administration-insured loans nationwide compared to less than 1% in 2011.
Several years ago the bank walled off its troubled consumer finance division and related assets into Citi Holdings which today holds $109 billion of first and second liens.
The serious delinquency rate on $67.5 billion of first mortgages held by Citi Holdings rose in the fourth quarter after declining the past two years. Gerspach noted that he expects delinquencies to "rise slightly in coming quarters" as previously modified mortgages start to default.
"At the same time, the pace of asset sales and modifications has slowed," he said.
Despite the uptick in delinquencies, Gerspach reassured investors and analysts that Citigroup has adequate reserves. "To date, those redefault rates remain below our expectations." He added that redefault rates on HAMP modifications are less than 15% and less than 25% on proprietary mods.
