Two financial giants announced plans to suspend foreclosures until details of a federal modification plan can be finalized — a move advocated by at least one banking regulator. Meanwhile, a sheriff in Michigan has decided to take foreclosure matters into his own hands and has implemented an indefinite moratorium in his county.
Citigroup Inc. said today it will halt all foreclosures on mortgages it owns until March 12, when President Barack Obama is expected to finalize details of a loan modification program. The moratorium began yesterday.
Obama is expected to use around $50 billion in taxpayer dollars to help modify U.S. mortgages.
Citi’s moratorium applies to loans on owner-occupied properties.
The New York-based institution will also hold off on foreclosing loans backing residential securitizations if an understanding has been reached with the investor.
“Today’s announcement expands on Citi’s current foreclosure moratorium in which Citi does not initiate or complete a foreclosure sale on any eligible borrower where Citi owns the mortgage, the borrower is seeking to stay in the home, which is his or her primary residence, is working in good faith with Citi and has sufficient income for affordable mortgage payments,” the statement said.
Citi noted that is has prevented 440,000 foreclosures on $43 billion in mortgages since the beginning of the housing crisis in 2007.
JPMorgan Chase & Co. has also imposed a foreclosure moratorium on loans it owns and services, according to a letter to House Financial Services Chairman Barney Frank from the firm’s Chairman, President and Chief Executive Officer James Dimon.
“Today we have initiated a foreclosure moratorium through March 6, 2009,” the Feb. 12 letter, which was published by the Wall Street Journal, stated. “We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by JPMorgan Chase.”
Dimon noted that the moratorium, which is identical to a 90-day moratorium implemented in October, will provide the Obama administration with enough time to finalize its modification plan. He also indicated that the company supported a national modification standard.
The moratoriums follow a plea this week from outgoing Office of Thrift Supervision Director John Reich for the thrifts it regulates to suspend foreclosures on owner-occupied homes until the administration’s modification program is finalized in the next few weeks.
In its November foreclosure prevention report last week, the Federal Housing Finance Agency said a recent moratorium enacted by Fannie Mae and Freddie until Jan. 31 was expected to begin impacting foreclosure activity beginning in December.
A sheriff in Wayne County, Mich., announced earlier this month that he would halt all foreclosures because mortgage servicers are not doing enough to help delinquent borrowers.
“I am doing so because its my opinion that recently enacted federal laws provide protections for homeowners facing foreclosure,” Sheriff Warren Evans explained in the statement. “The Troubled Asset Relief Program known as TARP that was approved by Congress last fall requires the Secretary of the Treasury to implement a plan to mitigate foreclosures.”
He said that around 300 to 400 foreclosure sales occur every week in the county and gave no date when the moratorium would be lifted. He called on all other Michigan sheriffs to follow his lead.
