Is is candid self-examination or misguided hype? That's the question being asked about a remarkable sentence that appears in a manual published this year for Citicorp's mortgage employees.

"We will no longer be the 'lender of last resort,'" the sentence reads, in part.

The obvious implication is that Citicorp at one time viewed itself as an extender of credit to people turned down by all other lenders. It is an inference that the nation's biggest bank vociferously denies.

A Handy Explanation

But it would go a long way toward explaining the sharp run-up in mortgage delinquencies at Citicorp the past two years.

The sentence used "a very poor choice of words" and is "overly dramatic," said Citicorp spokeswoman Susan Weeks. She hinted that the author would be reprimanded.

The sentence was brought o light in a report on the mortgage industry by SMR Research, a consulting firm based in Budd Lake, N.J. The "last resort" phrase appeared in an employee pamphlet about tightening of underwriting standards.

The sentence reads in full:

"With these changes, we will no longer be the 'lender of last resort' but the 'lender of first choice,' the 'lender you can count on, the brand-name lender' -- the lender with the best service, the best products and the best people!"

"I think the first part of the sentence is the most interesting," said Stuart Feldstein, president of SMR. Whether Citicorp was ever literally a last-resort lender is relative, he said.

"The lender of last resort is Louie down the street," Mr. Feldstein said. "The lender of the next-to-last resort is probably a finance company. But among the conventional residential mortgage lenders, Citicorp was certainly one of the last. That seems clear enough."

In the 1980s, he and others said, Citicorp used a strategy of lenient underwriting and relatively high pricing to become a giant in the industry. But in recent years, that approach has begun to show big cracks.

Citicorp's delinquencies are running far above the industry norm. The company recently decided to dismantle its central mortgage unit, farming out functions to other divisions.

SMR devoted 29 pages to the Citicorp turmoil in an annual review of the mortgage industry. "We will no longer be the lender of last resort," it suggested, would be a natural epitaph for Citicorp Mortgage.

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