Citigroup Permits Homeowners To Remain In Homes Through Its Foreclosure Alternatives Program

CitiMortgage yielded a new program to aid homeowners by allowing them to stay in

their properties for an extra 6 months as long as they hand in their property deeds when the six months expire. The new program termed Foreclosure Alternatives Program is deemed to attract 1,000 home participants and is open to the states of Illinois, Michigan, Texas, Florida, New Jersey and Ohio. CitiMortgage may implement the program in all states.

During a foreclosure, the financial institution will recover the property while the ex-homeowner will have to abandon the premise. Citibank's Foreclosure Alternative Program combines the provisions of a Deed In Lieu of Foreclosure thus permitting borrowers to not experience a typical foreclosure. Its purpose is to provide relief to families by allowing them to reside for an extra 6 months as long as they return the deed to the financial institution.

A regular foreclosure will harshly impact a homeowner's credit score. CitiMortgage's program, an extension of the Deed In Lieu of Foreclosure will not harshly impact homeowners' credit scores even if they agreed to abandon their homes in six months.

The pilot program is a way for banks to reduce the problem of homeowners who would prefer to walk away from their properties. It has been reported by Economy.com that more than thirty percent of United States mortgages are underwater. The term underwater describes the mortgage owed to be larger than the current value of the property.

Property researchers are afraid that borrowers who are in debt with 20% or more than their properties are worth are likely to abandon their properties through strategic default or walking away. Majority feel that there is a narrow opportunity for property values to make a come back to previous lofty levels in the foreseeable future.

According to Sanjiv Das of Citi Mortgage, avoiding foreclosure can be mutually less painful for both the homeowner and lender. He said that the goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. Under Citi's Foreclosure Alternative program, borrowers are still required to pay their utility bills. Citi is committed to paying a minimum of $1,000 per homeowner for relocation costs and will consider helping out in other expenses including the provision of relocation counseling by trained professionals. Other related costs such as homeowner's association and escrow fees will be determined on a case-by-case basis depending on the borrowers' unique financial standing.

The program requires borrowers to upkeep their home in good shape and consent to meeting up with professional relocation advisers at least twice in a period of 30 days for the purpose of preparing themselves for the next stage of their lives.

Program Eligibility

Foreclosure Alternatives Program was set up to assist homeowners who did not succeed in getting a loan modification or short-sale. To qualify for the program, borrower must initially be eligible for a permanent modification. If the borrower did not succeed in qualifying for a permanent modification, Citibank will decide if a short-sale will fix the problem. A short sale is when the financial institution nods to selling the home at a price lower than the mortgage amount owed. If the short-sale is not viable, the homeowner may then be turned to Citibank's Deed in Lieu program or alternatively known as the Foreclosure Alternatives Program.

To be eligible for this program: 1. Homeowners must possess first mortgages with a clear title owned by CitiMortgage. 2. Must be presently living and occupying the property. 3. Must be at least 90 days delinquent on your mortgage payments.

CitiMortgage's program was launched 90 days after Fannie Mae's November 2009 launch of their program termed Deed For Lease.

The mortgage giant's Deed For Lease program permits the borrowers to hand in their deeds in turn permits the borrower to lease the home for a year. Fannie Mae's program transforms borrowers into leasers once they have turned in their deeds.

by: Jeffrey Fisher

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