Citigroup getting stricter on riskier home loans

Citigroup Inc., one of the largest mortgage lenders, is telling brokers that starting Monday it will stop making some riskier home loans, documents obtained by Reuters show.

The move follows decisions by Countrywide Financial Corp., Wells Fargo & Co. and other major mortgage lenders to tighten their underwriting standards as homeowner delinquencies and defaults increase.

The changes at Citigroup Inc.’s CitiMortgage would limit no-money-down second mortgages and raise the minimum credit scores needed to obtain them. Borrowers take out second mortgages when they cannot get 100% financing from a single lender.

Asked to confirm the changes in mortgage policy, a Citigroup spokesman, in an e-mailed statement, said: “We routinely review our criteria and make adjustments as appropriate according to market conditions.”

CitiMortgage made $50.6 billion worth of loans from October to December, ranking third in the U.S., according to National Mortgage News.

CitiMortgage will stop offering second loans to some customers who want to finance 100% of a home’s value and cannot fully document their own finances, the documents say.