The bank extends its support to the real estate market.
Last week, Citigroup unveiled its plan of temporarily lowering mortgages by $500 for its unemployed borrowers. The announcement by its mortgage arm, CitiMortgage, came as a surprise to eligible mortgage holders who are on the brink of losing their homes to foreclosure. In addition, interest and penalties will be suspended for three months to allow their personal finances to rehabilitate until they find a job.
To qualify, a borrower must present a proof that he or she is out of work, sign a certificate that guarantees they are looking for a job, be at least 2 months delinquent with the monthly payments, currently resides in the home (primary residence), and the total loan must be lower than $417,500.
This is just the beginning of the company’s Citi Homeowners Assistance program that was launched last November with the aim of helping 500,000 mortgage borrowers get back on their payments. According to Sanjiv Das, CEO of CitiMortgage, “In today’s economic environment, Citi continues to build on its long-standing efforts to develop new ways to help our customers remain in their homes. Since the beginning of 2007, these efforts have helped approximately 370,000 homeowners we service avoid foreclosure on their homes. Under our new Citi Homeownership Assistance program we will preemptively reach out to help homeowners before they become delinquent, which is critical to avoiding the loss of a home and protecting their credit score and future borrowing potential.”
This isn’t the first time that involuntary unemployed borrowers are given special consideration. In 2002, the General Electric Co. presented the Job Loss Payment plan that paid up to $5,000 in principal, interest, taxes and other escrows. Borrowers who lost their jobs but were on time in their payments qualified for the program.
Last February, the California Housing Agency also introduced the HomeOpeners Program. To be covered, the borrower must be unemployed during the weekly period when he can claim the benefit of $2,500 or the actual monthly mortgage payment, whichever is lesser. It covers a period of 6 months.
The CitiMortgage plan should be replicated by other financial institutions. With the national unemployment rate hitting 8.1 percent last month, the mortgage industry will surely fall more in distress in what is regarded as the worst rate in 25 years.