7.3 billion - Citigroup

loans exiting foreclosure inventory declined quarter-overquarter,thus resulting in an overall increase in Citi‘s foreclosureinventory. The decline in the number of loans exiting Citi‘sforeclosure inventory continues to be driven primarily by theadditional state requirements to complete foreclosures as well asthe continued lengthening of the foreclosure process generally,which continues to be particularly pronounced in the judicialstates (i.e., those states that require foreclosures to be processedvia court approval) but also continues to occur in the nonjudicialstates where Citi has a higher concentration ofresidential first mortgages (see ―North America Residential FirstMortgages – State Delinquency Trends‖ above).To the extent Citi is not able to continue to decrease thenumber of loans moving into its foreclosure inventory, whetherpursuant to asset sales, modifications or otherwise, itsforeclosure inventory could continue to increase as theforeclosure process has largely stagnated, for the reasonsdiscussed above.North America Consumer Mortgage Quarterly Credit Trends—Delinquencies and Net Credit Losses—Home Equity LoansCiti‘s home equity loan portfolio consists of both fixed ratehome equity loans and loans extended under home equity linesof credit. Fixed rate home equity loans are fully amortizing.Home equity lines of credit allow for amounts to be drawn for aperiod of time and then, at the end of the draw period, the thenoutstandingamount is converted to an amortizing loan. Afterconversion, the loan typically has a 20-year amortizationrepayment period.Historically, Citi‘s home equity lines of credit typically hada 10-year draw period. Citi‘s new originations of home equitylines of credit typically have a five-year draw period as Citichanged these terms in June 2010 to mitigate risk due to theeconomic environment and declining home prices. As of March31, 2012, Citi‘s home equity loan portfolio includedapproximately $24.1 billion of home equity lines of credit thatare still within their revolving period and have not commencedamortization (the interest-only payment feature during therevolving period is standard for this product across the industry).The vast majority of Citi‘s home equity loans extended underlines of credit as of March 31, 2012 will contractually begin toamortize after 2014.As of March 31, 2012, the percentage of U.S. home equityloans in a junior lien position where Citi also owned or servicedthe first lien was approximately 31%. However, for all homeequity loans (regardless of whether Citi owns or services thefirst lien), Citi manages its home equity loan account strategythrough obtaining and reviewing refreshed credit bureau scores(which reflect the borrower‘s performance on all of its debts,including a first lien, if any), refreshed LTV ratios and otherborrower credit-related information. Historically, the default anddelinquency statistics for junior liens where Citi also owns orservices the first lien have been better than for those where Citidoes not own or service the first lien, which Citi believes isgenerally attributable to origination channels and better creditcharacteristics of the portfolio, including FICO and LTV, forthose junior liens where Citi also owns or services the first lien.52CITIGROUP – 2012 FIRST QUARTER 10-Q