Shortly after Uncle Sam bailed out Citigroup for a third time, the New York-based banking giant has unveiled plans to help troubled borrowers by reducing mortgage payments for some out-of-work home owners.
The program represents Citigroup's second move in recent months to align its operations more closely with President Barack Obama's plan to resolve the housing crisis. The federal government has pumped $45 billion into Citigroup and last week announced plans to increase its stake to as much as 36 percent of the company's common stock.
You'll recall that Citigroup in January became the only major player in the financial services industry to endorse controversial legislation allowing judges to alter the terms of primary mortgages during bankruptcy proceedings--a process known as "cram-downs." President Obama expressed support for bankruptcy reform himself when he introduced his housing plan two weeks ago.
From The Associated Press:
Citigroup Inc. said Tuesday that it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed…
Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer's primary residence, with homeowners meeting all insurer and guaranty requirements.
"Our Homeowner Unemployment Assist program is intended to serve as a bridge toward a longer-term solution, helping homeowners stay in their homes and in their communities while they get their feet back on the ground," CitiMortgage Chief Executive Sanjiv Das said in a statement.
Citigroup predicts thousands of homeowners may be eligible for the program over the next two years.
Those that partake in the program and are still without jobs after three months will have their mortgages handled on a case-by-case basis to come up with the best payment option, Citigroup said. Others that find work within the three-month period can go back to paying their original mortgage amount or receive a long-term loan modification if qualified.
The program may also be expanded to include customers that are in early delinquency stages or are current on their mortgage at a later point in time once an initial evaluation of the program is complete.
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