A Move to Reduce the Number of Foreclosures

Citigroup, the FDIC and a few other large banks are working to develop a plan to slow down the growing number of foreclosures of single family homes.  Citigroup plans on not allowing new foreclosures to be filed and homes in the middle of the foreclosure process will be halted for the time being.  In order for homeowners in trouble to be considered for this moratorium on foreclosures they must meet the following criteria:

·        The homeowner must want to stay in their home

·        The homeowner must cooperate willingly with the bank to develop an alternative payment plan

·        The homeowner must have the income necessary to make payments for the new alternative payment plan that is agreed to

 

Although this will first only affect borrowers with loans through Citigroup the plan is to expand these efforts to other loans that it services as well.  In order to reduce payments for current homeowners Citigroup plans on using the following avenues:

·        Reducing monthly principle amount

·        Extending the number of years left on the loan

·        Adjusting interest rates

 

I want to point out that this move is not a result of a “change of heart” but a result of incredible losses that Citigroup has suffered.  It has become very clear in the past few months that it is more profitable in the long term to work with struggling borrowers rather than going the foreclosure rate much of the time.  The staggering number of foreclosures has had a negative effect on the nation’s housing market.  To give you an idea of how widespread the problem is Mortgage News Daily reported in a recent article that 4 Million American homeowners are at least one payment behind on their mortgages.  If you or someone you know is at risk for falling behind on payments I would encourage them to contact the financial institution their loan is through and see if any alternative agreement can be reached.  For those getting new loans in the near future it is more evident now than it has been in many years that you need to be working with an experienced loan officer who can help educate you on not only what you qualify to purchase but, more importantly, what would be a wise amount to spend on a home in your particular situation.