By Christina Rexrode

Citigroup Inc. is nearing a deal to exit the mortgage-servicing business, according to people familiar with the matter.

The bank is expected to announce Monday that it is selling servicing rights of about 780,000 mortgages backed by Fannie Mae and Freddie Mac to a subsidiary of New Residential Investment Corp., these people said. The purchase price couldn't be immediately determined.

The mortgages are to borrowers who are not Citigroup bank customers. They represent approximately $97 billion in outstanding principal mortgage balances. New Residential is managed by anaffiliate of Fortress Investment Group.

The deal is expected to require approval of Fannie, Freddie and their regulator, the Federal Housing Finance Agency.

Citigroup is also expected to announce that it is outsourcing the servicing of customer mortgages to Cenlar FSB, a privately owned mortgage-subservicing company.

The move is aligned with both industry trends and Citigroup's recent history.

Some banks have been shrinking their exposure to the mortgage-servicing business because of increased regulatory scrutiny and costs. And New York-based Citigroup has been exiting businesses since the financial crisis nearly toppled it.

In mortgages, the bank has been moving toward doing business with just existing customers in U.S. cities where the bank has branches. Citigroup's mortgage-servicing portfolio is half the size that it was a decade ago, according to the trade publication Inside Mortgage Finance.

Still, Citigroup is the sixth-largest mortgage servicer in the U.S. Its expected exit from the business is another signal of non-banks gaining ground in both mortgage originations and servicing.

Write to Christina Rexrode at

(END) Dow Jones Newswires

January 30, 2017 05:44 ET (10:44 GMT)

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