|Citigroup Inc.'s mortgage unit is temporarily modifying loans for laid-off borrowers.
Eligible customers of CitiMortgage Inc. who have lost their jobs will see their payments lowered for three months, an announcement today said. Thousands of borrowers are expected to be impacted.
Under the initiative, dubbed Homeowner Unemployment Assist, the majority of eligible borrowers are expected to see their payments lowered to an average of $500 -- an amount that Citi said is below the national average cost to rent a one-bedroom. The move will help prevent foreclosures while helping some people avoid having to downsize to smaller rental residences.
The program starts today and requires that borrowers maintain contact with Citi throughout the modification period.
To qualify for the temporary modification, the loan must be a conforming first mortgage that is owned and serviced by CitiMortgage. Borrowers must be at least 60 days past due or in foreclosure on their primary residence, and they need to have enough cash to make the lower payments.
Citi said it owns less than 10 percent of the 4.3 million mortgages it services.
Citi noted borrowers need to meet insurer or guaranty requirements, and they cannot be eligible to participate in the company's streamlined modification program.
"We understand the emotional and financial trauma that can occur when homeowners lose their jobs, and families are forced to downsize to a smaller space and move away from their neighborhoods and schools," CitiMortgage Chief Executive Officer Sanjiv Das said in the statement. The "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."
Once re-employed, borrowers will resume the originally scheduled payments. Some may be eligible at that point for long-term loan modifications under Citi's streamlined modification program.
Citi said it will work with borrowers who remain unemployed beyond three months on a case-by-case basis.
After evaluating the initial results, Citi will consider expanding the program to borrowers less delinquent than 60 days.
The New York-based company said it has prevented around 440,000 foreclosures on loans totaling $43 billion. It has also helped prevent four-out-of-five foreclosures last year on loans it owns. The latest initiative is expected to help the other 20 percent.
Citi also touted its 30-day moratorium on loans it owns that ends March 12, at which point it expects to have details on the Obama Administration homeowner rescue plan.