I just saw an article in the Las Vegas Review journal entitled, “Citigroup to help at-risk borrowers stay in homes“. According to this article, Citigroup will be initiating a moratorium on most foreclosures in an attempt to help at-risk borrowers avoid foreclosures and keep their homes. Over 4 million Americans homeowners were at least one payment behind on their mortgages at the end of June. Citi has stated that it will not initiate a foreclosure or complete a foreclosure on any borrower who wants to stay in their home, as long as that home is their primary residence and so long as the borrower earns enough income to make affordable mortgage payments and is working in good faith with Citi. This move is a means of to help cut financial losses and help homeowners get current on their payments. Citi is also working to expand the moratorium to mortgages not held by Citigroup.
Citi plans to contact some 500,000 homeowners who are considered to need assistance in order to stay up-to-date on their mortgage payments, approximately 1/3 of all mortgages held by Citigroup. Along with Bank of America, JPMorgan Chase & Co. and Wells Fargo, Citigroup is one of the four biggest US-based banks. Unlike the other three banks who managed to post profits over the last four quarters, Citibank has reported losses. Citibank hopes to help reduce their losses with this moratorium on foreclosures. Citigroup plans to concentrate on areas that have been harder hit and have higher-than-average unemployment and foreclosure rates. In all, this moratorium will affect some $20 billion in mortgages.
Even though Citi has avoided amortization loans, adjustable-rate mortgages and other risky mortgages, they have still felt the effects of the decline in national real estate markets. Similarly, JPMorgan has been helping some of its customers since early 2007 and Bank of America will start to modify some 400,000 loans come December 1. The US government plans to launch a program to help some 3 million borrowers avoid foreclosure but no details have been announced as of yet.
