Citigroup Will Halt Sale of Single Premium
Credit Insurance on Mortgage Products

The heat over alleged "predatory lending" practices has convinced Citigroup to stop the sale of one of a highly criticized product common on subprime mortgage loans. Single premium credit insurance has been the target of community activists and some regulators who accuse lenders of slipping the product past unsuspecting borrowers and lumping the premium into the amount financed, adding thousands of dollars to the outstanding balance. Citi had been under increasing fire from activist groups following its acquisition last fall of Associates First Capital, the large finance company with extensive subprime mortgage lending operations. Robert Willumstad, chairman and CEO of Citigroup's consumer operations said that the company's subprime unit, Citifinancial, Inc., is developing mortgage credit insurance products with monthly premiums as an alternative and hopes to have them approved in all states by the end of the year. Eleven states, including North Carolina and Illinois, have already approved the product.