CITIMORTGAGE'S NEW MORTGAGE program may not sound as catchy as sister Citigroup subsidiary Citibank's “live richly” ad campaign, but it means good news for builders.

After focusing on existing-home mortgages, the national lender has has venturedintointothe new- the new-homehome market, market, rolling out a temporary-to-permanent loan product that first covers the home's construction cost and builder payments and then converts into a homeowner mortgage. “We wanted to serve our customers on a broader basis, and we didn't have a viable construction loan product,” says David Schneider, CitiMortgage's president. “We felt we needed to broaden our offerings.”

Targeted at both home buyers and builders, the loan is now available in all 50 states after an 18-month rollout. At CitiMortgage, which did $100 billion in originations last year, new residential construction lending represents a small but growing market: The company expects to do $1 billion worth of temp-to-perm loans annually by the end of 2005.

According to Richard Nirk, executive director of the National Association of Residential Construction Lenders, such a temp-to-perm loan program offers builders several advantages. First, it reduces a builder's financial exposure by transferring much of the risk from the builder to the home buyer. Second, it improves profitability by reducing a builder's financing costs. Finally, the CitiMortgage program gives builders a chance to create a relationship with a national lender, which can be critical if a builder's local or regional bank is purchased by a larger player.