It was announced earlier this week that Citigroup has initiated a plan to place foreclosures on hold. They are implementing a similar plan as Wells Fargo, Morgan Stanley Chase, and Wachovia (soon to be Wells Fargo). This moratorium will affect properties that are in foreclosure and properties that have been moving toward foreclosure. The focus will be primarily in the areas where foreclosure and unemployment rates are higher, which includes states like California, Arizona, Michigan, Indiana, Ohio, and Florida.
So, who qualifies for this moratorium? Initially it will be the loans that are owned by Citigroup, but they are working on expanding the plan to include loans where they are the servicer for other investors. The borrowers will need to also meet certain criteria: want to stay in the home, show good faith by working with the lender, and their income must support paying the mortgage. Borrowers that do not meet this minimum requirement will continue through the foreclosure process because any adjustments will not help their situation.
The plan is to restructure the loans to benefit the homeowner and save the property from going into foreclosure. The fact is, lenders are not in the business to own property and do not want to take on the additional expenses associated with owning and selling properties. With this in mind, the lender is willing to reduce the loan balance and extend the amortization period which will ultimately lower the mortgage payment. To top it off, they are reviewing the borrowers interest rate and adjusting it accordingly. Ultimately, they are attempting to help the homeowner in any way possible. This is a large effort which will require almost 600 bank employees to ensure its success and will not be completely overnight.
Citigroup is one of many companies that suffered greatly from the subprime crisis. They are finally at a point where they realize that working with the borrowers will prevent foreclosures. It may not be the quickest way, but is certainly more effective and beneficial to everyone involved.
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Thanks for taking the time to post this ... excellent information
As more and more lenders find it in their best interest to modify rather than foreclose, we should see a change in the market. Thanks for the post John.
I am happy they did this but still disapointed that I can't send them whole loans any longer. Working with Wells and Chase now and getting US Bank going but the CITI system and I really got along well.............
It was just a matter of time before Citigroup was going to follow the others. It needs to be done in order for their loans to be stronger.
Thanks for commenting Debbie.
Fred - I know this is something you are already familiar with and you still commented. Thank you!
Hey Geoffrey. I've never written a loan through Citigroup, so I can not say that I am familiar. Like you, we have several but I have never found the need to originate one there.
John, As of April 2008, I still saw home equity loans for 125% of the home value and shook my head. I hope to see some of our major lenders learn from their past mistakes
Wow Paul. I have not seen that. Its crazy to think some lenders would still approve that sort of thing. As far as I know, we aren't doing it here in Texas.