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.