Citi offers new mortgage payment plan

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Citi’s new mortgage payment plan

From the article:

Citigroup Inc. will announce Tuesday a new program aimed at addressing the latest challenge facing the mortgage industry: unemployed homeowners.

Under the program, Citigroup will temporarily lower mortgage payments to an average of $500 a month for certain borrowers who have recently lost their jobs and are at least 60 days behind on their mortgage payments. Borrowers will be allowed to make the lower payments for three months. Citigroup will waive interest and penalties during this period.

Citigroup’s announcement comes days before the Obama administration is expected to announce guidelines for its massive loan-modification program, a cornerstone of its effort to fight the housing crisis. The bank’s new initiative takes aim at one of the hardest groups of borrowers to assist: those who have seen their income fall sharply.

“We expect that there will be thousands of people we can help,” said Sanjiv Das, chief executive of CitiMortgage, who called rising unemployment “the single biggest issue facing mortgage servicers.” Although the novel program will help just a small fraction of troubled borrowers, Mr. Das said he hopes it will be copied by others in the industry.

To qualify for the program, borrowers must live in the home and have a mortgage that is owned and serviced by CitiMortgage. The program applies only to loans of $417,500 or lower. Citigroup holds 1.4 million mortgages on its books. It also services another four million loans for others, but those don’t qualify for the program.

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Of course, there will be people out there who are paying their mortgage on time and will say, “Hey! What about me? I am paying on time, I didn’t burn my cash on a second mortgage or an equity line to rebuild my kitchen or basement, I didn’t burn my cash on going to Vegas or buying a more expensive car than I need. These people were irresponsible and they should suffer for it, not benefit!”

This is a legitimate concern – that as Rick Santelli said, is the reward of bad behavior. These types of arguments make bankruptcy reform very difficult, and a very emotional issue.