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Foreclosure News | Foreclosure Resources

Foreclosure Strategy Strengthened at Citi

Efforts have already prevented foreclosure on $35 billion in mortgages

November 11, 2008

By MortgageDaily.com staff


A host of foreclosure-prevention initiatives were announced by Citi -- a company with a serious delinquency rate that is more than double the rate of its peers.

The New York-based financial institution said Monday that its loss-mitigation actions and proactive modifications efforts have already prevented around 370,000 foreclosures on $35 billion in mortgages since 2007.

The latest plan includes proactive communication with 500,000 borrowers who are not delinquent but are likely to default. Trained counselors in borrower relief centers will contact borrowers on Citi-owned loans by telephone, written correspondence, e-mail and online social networks. Efforts will be focused in areas with weak real estate and employment markets.

Citi expects $20 billion in workouts to result from this effort.

The company, parent to CitiMortgage and CitiFinancial, noted its streamlined loan modification program is similar to the IndyMac Federal Bank FSB model established by the Federal Deposit Insurance Corporation. Payments for qualified borrowers are lowered by reducing interest rates, extending loan terms or writing down principal.

Citi will also systematically extend its foreclosure moratorium practice, which will stop the foreclosure process for borrowers on Citi-owned mortgages. This feature applies when the borrower wants to stay in the property as a principal residence, is cooperating with Citi in good faith and has enough income to afford the payment.

"Citi is working diligently with investors to secure their approval to expand the program to include mortgages Citi services but does not own," the statement said.

The company touted its record of counseling workshops that it co-hosted in 25 cities last year, funding for NeighborWorks America's Center for Foreclosure Solutions, and donations of up to $100,000 to help revitalize low- and middle-income neighborhoods in 14 communities.

Citi explained that it avoided originating loans with negative amortization and option adjustable-rate mortgages. It said it also didn't provide interest-only, high loan-to-value or stated-income programs to borrowers with low FICO scores.

"On balance, Citi mortgage originations did not follow the market in aggressively introducing non-traditional products and more aggressive underwriting practices," the press release stated.

Delinquency of at least 90 days was 3.85 percent on Sept. 30, more than double the 1.76 percent level on Sept. 30, 2007, according to Citigroup Inc.'s third-quarter earnings data.

Citi's delinquency is higher than other mortgage servicers.

At Freddie Mac, which reported a $2.2 trillion total mortgage portfolio as of Sept. 30, 90-day delinquency stood at 1.22 percent on Sept. 30 -- less than half of Citi's level. Freddie doesn't service loans, so its portfolio represents loans serviced by a variety of Freddie-approved servicers.

Over at Fannie Mae, which reports delinquency on a one-month lag, 90-day lates stood at 1.57 percent on Aug. 31. Its total book of business, serviced by Fannie-approved servicers, was $3.079 trillion at the end of the third quarter.

Citi highlighted its Office of Homeownership Preservation, which borrowers can access at www.Citigroup.com.

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