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Citigroup Performing Well In Foreclosure Prevention


August 25th, 2009

 

In the 2nd quarter of 2009, Citigroup aided 108,000 at risk homeowners avoid foreclosure. This represented a 30% increase from the 1st quarter of 2009.

 

In the 2nd quarter, Citigroup experienced a significant increase in the ratio of helping borrowers avoid foreclosures over the number of foreclosures. The ratio was 12-to-1, which doubled from the 1st quarter.

 

According to Sanjiv Das, CEO of CitiMortgage, the company focuses on aiding as many borrowers as they can by offering solutions to tailor fit unique borrower financial needs.

 

The Mortgage Bankers Association reported that there was an increase in the number of borrowers needing help. The percentage of borrowers who missed at least one payment reached 13.16% in the 2nd quarter. This represented the highest percentage the association as ever announced. The chief economist of The Mortgage Bankers Association said that both delinquencies and foreclosures will not peak until unemployment reaches its high by next year.

 

Citigroup’s offerings are not only modifications via the government rescue program but also other options including extensions, mortgage forbearances and reinstatements. Loan Modifications were actually lower by 5% in the 2nd quarter due to the nature of the government’s modification program which requires a 3-month trial before the modification is made official.

 

The Obama administration reported in early August that 400,000 mortgage modification offers had been extended via the government’s program with 230,000 trial modifications already underway. The administration believes they are on track in helping 3 to 4 million homeowners over the next 3 years. According to officials, progress reports are to be announced each month.

 

Unforeseen Obstacles

 

Treasury Secretary, Tim Geithner including Shaun Donovan, Secretary of Housing & Urban Development urged the CEOs of service firms enrolled in the government program to improve borrower response time by increasing staff and streamlining the application process.

 

CitiMortgage admitted that the recent government rescue plan that was announced in February was not easy to implement. As the company’s loss mitigation department got swamped with large number of calls, it had to act swiftly. Since the beginning of the year, it has added 1,400 new employees to its loss mitigation department, trained 4,000 employees and expanded more call centers to accommodate the government’s Home Affordable Modification Program.

 

By July of 2009, Citigroup has offered 40,000 trial modifications to borrowers under the government program. Overall, the company has prevented 625,000 borrowers from falling into foreclosure since 2007 by adopting several strategies.

 

Individual assistance

 

The number of foreclosures in line for process, increased about 10% from the 1st quarter for Citigroup. However, Citi’s number of mortgages that entered foreclosure dropped by 14%.

 

According to Citi, only 2% of all loans serviced by Citigroup experienced loss mitigation or completed foreclosure by the end of the 2nd quarter.

 

Sanjiv Das of CitiMortgage said that in order to keep the re-default rate low after modifications have been performed, Citi offers a personalized assistance as appose to systematic approach. For example, the company offers an unemployment assistance program which allows borrowers to make a flat $500 mortgage payment for 3 months upon losing their job.

 

The company is also stepping up efforts to increase short sales and is on track in increasing the number of completed short sales in the next 3 to 6 months. In short, a short sale is when a borrower sells a home for less than the mortgage amount and the difference is forgiven by the lender.

 

Mr. Das encourages troubled homeowners to call their servicers now instead of the delay. Citi encourages customers to call any time they feel distressed with making their mortgage payments so as to explore viable options for them. According to Das, at times customers contacted them too late and it makes it difficult for them to resolve problems. Das mentioned that if they do not qualify for the government program, they are plenty of other options available.

 

 

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