Half a Million Foreclosure Victims to Benefit from New Measure

Posted on November 18, 2008
Filed Under Foreclosure Homes | Leave a Comment

A new programme initiated by the country’s fourth largest mortgage bank, CitiMortgage is expected to benefit about half a million foreclosure victims. The assistance measure will be of help to 500,000 customers who although up-to-date in their payments live in places where real estate markets are tumbling or where unemployment is on the rise and thus exposing them to foreclosure risk. The beneficiaries are about a third of all the mortgages held by CitiMortgage.

Sanjib Das of CitiMortgage said, “Borrowers need to know what options are available to them before they are in a situation of financial distress. They should know Citi will modify their loan even before they miss their payments.”

The mortgage company expects that the measure will be of immediate help to 130,000 people facing foreclosure. The total loan amount is around $20 billion. The help will be given irrespective of the type of mortgage held by the borrower. Das explained, “Ours is not product specific, ours is borrower specific.”

The initiative taken by Citi coincides with the steps being taken by federal and state governments together with consumer groups and other banks like Morgan Chase to contain the foreclosure menace. The only way to put brakes on the financial problem is to help people to stay in the houses that are their homes and not be evicted by foreclosures.

However Guy Cecala of “Inside Mortgage Finance” publication gave out a note of warning that these measures are not much different from the actions that are already being taken since the last one-year. These look great on paper but what real impact it will have only time can tell. Cecala skeptically remarked, “Generally, the numbers they throw out there in terms of expectations are not that different from what they said they would do six months or even a year ago.” He drew attention to the fact that the announcement from CitiMortgage has come only a day after the announcement by the Congress that it would be critical for all concerned if the lenders and servicers do not step up their assistance towards foreclosure victims. He explained, “All these initiatives are as much in response to political pressure as they are to lenders responding to rising foreclosures.”

The Citi assistance measure is fashioned after the steps being taken by FDIC after it took over IndyMac. The plan is for those borrowers who are delinquent and whose income are not more then 38% of their total earnings. Cite promises to modify those mortgages that are risk by 40%.

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