Citigroup preparing sale of mortgage backed securities, its first since 2008
The bank that was bailed out with USD45 million taxpayer money during the financial crisis is now planning its first sale of mortgage backed bonds since 2008. Citigroup announced the plan to the public and said these bonds would be backed by prime jumbo mortgages worth USD210 million and not government funds such as what the previous system had in place.
The said prime jumbo mortgqages were acquired by the company's investment bank subsidiary from lenders such as Nationstar Mortgage LLC, DBRS Ltd among others. Ths was confirmed by DBRS in a statement saying, "The ratings reflect transactional strengths that include high quality underlying assets, well qualified borrowers and satisfactory third party due diligence review."
The ratings referred to was credit ratings agencies planning to assign AAA rankings to a value of USD196.3 million of the listed debt covered by the securities. DBRS did also say that the inherent defect in the planned transactions was its 'backstop' on warranties of home loan quality provided by debt originators may lapse after a specific time frame or period.
For its part, Citigroup spokesperson Scott elfman declind to make a comment on the matter.