Citi Allowing Struggling Homeowners To Remain In Homes For Additional 6 Months
Feb 11th, 2010
Citi launches a new program termed Foreclosure
Alternatives Program which allows homeowners to remain in their homes for an
additional 6 months provided if they return the deed of their property at the
end of the period. The pilot program initially expects 1,000 homeowners to
participate and is available in
In normal foreclosure procedure, the lender re-possesses the property legally by evicting the borrower. Citi’s Foreclosure Alternatives program is an expansion of the ‘Deed in Lieu of Foreclosure’ whereby allowing the homeowner to avoid a completed foreclosure. In addition, it allows the homeowner to remain in the home for an additional 6 months with the agreement that the borrower will return the deed of the property back to the lender.
Normally, a conventional foreclosure takes a more severe damage on the borrower’s credit score. Citi’s program, an expansion of the ‘Deed in Lieu of Foreclosure’ will not severely impact borrowers’ credit scores even if they have to vacate after 6 months.
The new program is an effort
by lenders to curb the growing popularity of homeowners ‘walking-away’ from
their homes or otherwise known as the act of ‘strategic default’. According to
Moody’s Economy.com, more than 30% of
Housing analysts fear that homeowners who owe at least 20% or more than their homes are currently worth are gaining incentives to walk away from their homes. Many fear that there is a slim chance that housing prices will rebound to the old levels in the near future.
According to Sanjiv Das of Citi Mortgage, avoiding foreclosure can be mutually less painful for both the homeowner and lender. He said that the goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. Under Citi’s Foreclosure Alternative program, borrowers are still required to pay their utility bills. Citi is committed to paying a minimum of $1,000 per homeowner for relocation costs and will consider helping out in other expenses including the provision of relocation counseling by trained professionals. Other related costs such as homeowner’s association and escrow fees will be determined on a case-by-case basis depending on the borrowers’ unique financial standing.
Part of the agreement will require the homeowners to maintain the property in its current condition and agree to meet twice a month with trained relocation counselors so as to prepare themselves for a smooth transition into the next chapter of their lives.
Citi’s Foreclosure Alternatives Program was designed to help those who failed to get a loan modification or achieve a short-sale. To be eligible for this program, the borrower must first be evaluated for a permanent mortgage modification. If the homeowner does not qualify for permanent modification or other solutions, Citi will explore the viable option of a short-sale where it may accept a buyer’s offer and agree to sell the home for less that the mortgage amount owed. If the short-sale arrangement is not viable, the homeowner may then be considered for Citi’s Deed in Lieu program or otherwise known as the Foreclosure Alternatives program.
To be eligible for this program:
- Homeowners must possess first mortgages with a clear title owned by CitiMortgage.
- Must be presently living and occupying the property.
- Must be at least 90 days delinquent on your mortgage payments.
Citi’s Foreclosure Alternative program was announced 3 months after Fannie Mae’s November 2009 announcement of their ‘Deed For Lease Initiative’.
Fannie Mae’s ‘Deed For Lease’ program allows homeowners to return the property deed back to the lender an in exchange, allow the homeowner to rent the home for up to 12 months. Fannie Mae’s recently announced program literally converts homeowners into renters after they have returned the property deed.
Citi’s Other Initiatives
In addition to the series of other initiatives launched by CitiMortgage to assist homeowners in distress are as follows:
Office of Homeownership Preservation (OHP) was founded in 2007 providing a range of support services beyond mortgage modification. It also has an extensive partnership network with non-profit organizations offering legal assistance, counseling and translation services to borrowers.
Citi Homeowner Assistance Program (CHAP) was founded in November 2008. It was designed to help potential at risk borrowers to remain current on their payments and keeping them in their homes.
Citi Unemployment Assist Program was founded in March 2009 to provide longer-term solutions to few qualifying recently unemployed and delinquent borrowers with mortgages owned by CitiMortgage. Under this program, eligible borrowers will get their monthly payments reduced to an average of $500 for a period of 3 months. This is equivalent to the national average cost of renting a one bedroom residence.
For an update of Citi’s latest initiatives, please visit: www.citigroup.com/citi/community
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