scribblings from a deist transhumanist libertarian minarchist citizen soldier

Citigroup rethinking foreclosures

Posted by Trevor in under other on Nov 11th, 2008 | View Comments |

We should always look for alternatives to the bailout mentality, where made up money is thrown all around at random in hopes of “stimulating” the economy. Citigroup appears to be taking a measured approach to the current mortgage crisis.

Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes — making Citi the latest big bank to announce sweeping efforts to try to curtail losses from souring mortgages.

Citi said late Monday it won’t initiate a foreclosure or complete a foreclosure sale on any eligible borrower who seeks to stay in a home if it is the borrower’s principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments.

Citi said it is also working to expand the program to include mortgages the bank services but does not own.

Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are deemed as potentially needing assistance to keep current with their payments. This represents about one-third of all the mortgages that Citigroup owns, the bank said.

Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal, or increasing the term of the loan, steps known in the mortgage industry as a workout.

Irresponsibility should not be rewarded. The other side of the coin is that our society does a terrible job of teaching individual responsibility. We teach the exact opposite from the top down. Congress steals from the people and redistributes the wealth however they see fit. They claim this is their mandate. Maybe it is their mandate. Nevertheless, when the power structure is designed to foster irresponsible fiscal behavior, it is nice to see some signs that common sense is being used, at least on a limited scale.

If people can be kept in their homes their lives are somewhat more stable than they would likely otherwise be. Citigroup benefits from less foreclosure losses. I don’t see any losers when it comes to taking reasonable steps to keep people in their homes.

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glenn

I amone of those people who are having problems, I have a loan icant afford because our household income dropped 50% in the last year, and a home i would like to stay in. Though we have tried to sell and in the last 6 moths 1 person has looked at it. I am working with citi to modify our loan to beable to stay in our house, they are not even trying to make it work . We are current with our mortgage and would like to stay that way but the last 6 weeks we call our loan mod agent and never here back. So CITI may be a forerunner on paper but not in Practice .
Kelton Baker

No, actually this is an effort on the part of Citibank to avoid the route of foreclosure with ONLY those borrowers who show sufficient promise to make concessions worth giving. It is a voluntary and defensive effort on the part of Citibank to stem huge losses from owning homes they don't want and probably can't sell in exchange for new mortgage plans that will be less profitable, but at least profitable rather than toxic.
People "at risk" have likely already been punished and have learned plenty of lessons on misusing credit, they probably are unable to obtain new credit or refinance their current loans and are at the mercy of Citibank to offer alternatives to foreclosure. I see this as "win-win"; obviously, if people had been responsible with their duties, things would be better, but in a compromise situation, this is far better.

I just learned about how in Las Vegas there are homes where people are 12+ months delinquent, and yet the banks are not forclosing, simply because the expense of foreclosure and a depreciating vacant bank-owned home exceeds keeping open the possibility of re-negotiating the note at a later date.
Trevor

@kate:

I don't think changing interest rates or allowing someone to skip payments is forgiveness. Neither is revaluing the loan. I agree on principle with the idea that people need to be held responsible Kate, but in this case it is a choice between making an adjustment or throwing people out in the street.

Let's start by holding Congress accountable and work our way down.
kate

Sorry but I do not agree with forgiving people the responsibility they made. Many of us bought homes, live within our means and struggle. NO NEW CARS, FANCY LEATHER COUCHES, FANCY ART . THE KEY HERE IS LIVE WITHIN YOUR MEANS. Too many people will use this as another excuse to just spend money they do not and will not have. If you forgive part of there principle what are you going to do for your PRIZE customers that have dutifully paid there loans and mortgages forgoing movies out, dinners out , fancy vacations and such. THIS IS HOOOEY!!!! When you slap the wrist of a wining child and then give them exactly what they wanted. EVER TAKE PSYCH 101 People continue the same behavior unless held accountable.