Citigroup is reporting a higher redefault rate on home loans it has modified and signs of heightened risk in its servicing portfolio.

In a report due out today, Citi said the redefault rate in the third quarter on its $746.8 billion servicing portfolio did not exceed 39% for loans modified between the second quarter of 2008 and the second quarter of 2009. That rate — the percentage of borrowers who become delinquent 60 or 90 days after modification — was higher than Citi's redefault rate in the second quarter, which did not exceed 29%.

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