Citigroup Inc. will lend as much as $2bn to independent mortgage firms, hoping to profit in a business it mostly exited after the market seized up in 2007.

Citigroup is using funds from the U.S. Treasury’s $45bn bailout for so-called warehouse lending through its Global Securitized Markets group, the New York-based bank said yesterday in a statement. Mortgage banks rely on warehouse lending to make loans and then hold the mortgages until they are sold.

The lender said the capital will help revive shrunken mortgage markets even if the bank itself isn’t directly lending the funds to consumers.

bloomberg.com