Author Archives: Katerina Gasset
Author Archives: Katerina Gasset
As one of the nation’s largest mortgage servicers, CitiMortgage is still contending with a deluge of foreclosures that just doesn’t seem to be abating, despitestepped up mitigation efforts and government relief programs. On Thursday, the company announced a new pilot initiative that will allow distressed CitiMortgage borrowers to avoid foreclosure and remain in their homes for six months if they agree to sign over their property deeds to the lender.
In addition, Citi will provide relocation assistance to help borrowers transition to another residence at the end of the program. This expanded deed-in-lieu-of-foreclosure program is being piloted in Texas, Florida, Illinois, Michigan, New Jersey, and Ohio, beginning February 12.
“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage. “The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives.”
In exchange for the deed on their property, CitiMortgage will allow borrowers to stay in their homes for up to six months without making mortgage payments under its new Foreclosure Alternatives Program. At the conclusion of the grace period, the company will provide a minimum of $1,000 to help the borrower move. Citi will also provide
relocation counseling by trained professionals and will cover certain monthly property expenses if the bank determines the borrower can no longer afford them.
Payment of utilities costs will be the responsibility of the borrower. Other costs incurred by the borrower, such as homeowner’s association and escrow fees, will be determined on a case-by-case basis considering the borrower’s specific financial circumstances, the company said. As part of the agreement, borrowers must maintain the property in its current condition and agree to bi-monthly meetings with Citi’s relocation professionals.
According to CNN, Citi will also forgive any difference between the value of the home at time of repossession and what the borrower owes – once the deed goes back to the lender, the borrowers walk away free and clear.
Citi explained that before a borrower enters the Foreclosure Alternatives Program, they must first be evaluated for a permanent mortgage modification. For those who do not qualify for a modification or another solution, CitiMortgage says it will explore the possibility of a short sale, and if that’s not feasible, then the borrower may be considered for the deed-in-lieu program.
In order to be eligible, homeowners must hold first mortgages with a clear title owned by CitiMortgage, occupy the property, and be at least 90 days delinquent on their mortgage payments.
As it evaluates the progress of the pilot program, CitiMortgage said it will assess whether or not to expand the program to other parts of the United States. The initial pilot is expected to help as many as 1,000 families.
While CitiMortgage has done deeds-in-lieu and short sales in the past, the company says it is increasingly looking to them as alternatives to foreclosures.
“We hope others in our industry will join us in helping distressed borrowers across the country,” said Das.
Das told CNN that he knows of no other big servicer with a program like Citi is implementing. “This is a deed in lieu on steroids,” he said.
WASHINGTON – As part of the Administration’s ongoing housing market stabilization plan, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) today released updated guidance for servicers participating in the Administration’s mortgage modification program. This guidance refines the documentation requirements in order to expedite conversions of current trial modifications to permanent ones.
“With more than 850,000 homeowners in trial and permanent modifications, we are providing immediate relief to struggling homeowners,” said Phyllis Caldwell, Chief of Treasury’s Homeownership Preservation Office. “Today’s guidance represents our commitment to more efficiently move qualified homeowners into permanent modifications.”
“Increasing the number of borrowers receiving permanent modifications under HAMP is critical to our efforts to preserve affordable and sustainable homeownership,” said HUD Senior Advisor for Housing Finance William Apgar. “While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification.”
On December 23, 2009, the Administration required most trial modifications to be placed in a temporary review period to ensure that all borrowers are being fairly evaluated for the program. During this temporary review period, servicers were not permitted to cancel an active HAMP trial modification for any reason other than failure to meet the HAMP property eligibility requirements. This allowed servicers to convert a significant number of trial modifications to permanent ones. In fact, the total number of conversions more than doubled in December. Guidance released today will help improve this conversion process for the future.
The updated process requires that key documents, including proof of income, be obtained from the borrower before a borrower evaluation can begin. This more robust requirement of upfront documentation will make it easier and quicker to convert trial modifications to permanent modifications and enable servicers to use their resources more effectively.
Supplemental Directive 10-01 provides guidance on two major issues:
1) New Requirements that Documentation be Provided Before Trial Modification Begins
Today’s guidance refines the documentation process and makes it easier for eligible borrowers in trial modifications to get permanent modifications quickly. Under this guidance:
A simple, standard package of documents will be required prior to the servicer’s evaluation of the borrower for a trial modification. This process will be required for all new HAMP modifications that became effective after June 1, although mortgage servicers may implement it sooner.
2) Converting Borrowers in the Temporary Review Period to Permanent Modifications
In December, Treasury implemented a review period through January 31 to provide servicers additional time to collect and submit missing documentation for borrowers in trial modifications, to require that borrowers be notified of any missing documents, and to give borrowers an opportunity to dispute and correct any erroneous information in their applications. Today’s guidance clarifies for servicers the proper procedures for conversion of those borrowers who are current on their monthly payments to permanent modifications.
The Home Affordable Modification Program aims to help responsible American homeowners maintain a sustainable monthly mortgage payment through a pay-for-success framework that aligns incentives of borrowers, lenders and servicers. Over 900,000 Americans have begun trial modifications since the program’s inception and over 110,000 have been approved for permanent modifications as of December 31, 2009. The median monthly savings for individual homeowners is more than $500 per month. Over 100 servicers have signed up to participate in HAMP, covering more than 89% of mortgage debt outstanding in the country.
January 28, 2010
Supplemental Directive 10-01 is available at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1001.pdf