Citibank Allowing Homeowners To Remain In Homes

Citibank unleashed a new program early 2010 that will permit borrowers to live in their homes for another six months with the agreement that borrowers will turn in their property deeds when the time is due. The new program called Foreclosure Alternatives is poised to sign up a thousand homeowners in the following states of Ohio, New Jersey, Michigan, Illinois, Florida and Texas. Citibank may make this program available all over the United States at a later time.

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.

Normally, a conventional foreclosure takes a more severe damage on the borrower's credit score. Citi's program, an expansion of the 'Deed in Lieu of Foreclosure' will not severely impact borrowers' credit scores even if they have to vacate after 6 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.

Real estate market forecasters point out that mortgage holders who owe twenty percent of more are likely encouraged to vacate their homes by simply walking away. Many of these folks feel that it is unrealistic for home values to return back to the high levels in the short term.

Sanjiv Das who is CEO of CitiMortgage says that preventing foreclosure is of good interest to both parties of borrower and bank. The intention of the program is to aid the borrower in moving on to the next phase of their lives. Homeowners will still need to pay their electric and gas bills. The bank is willing to set aside a minimum of one thousand dollars per borrower for transitioning expenses including other costs involving the hiring of professional relocation advisers. Other expenses such as HOA and escrow charges will be decided based on each borrower's ability to pay.

As part of the program, homeowners agree to sustain the well being of their residential premises and encouraged to meet with certified relocation professionals twice every thirty days as they plan to move on with their new lives after moving out of their homes.

Program Requirements

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.

Fannie Mae's 'Deed For Lease' program allows homeowners to return the property deed back to the lender and in exchange, allow the homeowner to rent the home for up to 12 months. Fannie Mae's recently announced program literally converts homeowners into renters after they have returned the property deed.

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