Citi Lets Distressed Homeowners Remain for 6 Months

Citigroup Inc. Is set to let homeowners on the verge of foreclosure stay in their homes for six months, if they agree to turn over the deed to their property.

On Thursday, Citi stated it is launching the pilot program, dubbed "Foreclosure Alternatives."

Initially, an estimated 1,000 homeowners are expected to participate.

A lender assumes legal control of the property and evicts the homeowner in a normal foreclosure.

Like other "deed in lieu of foreclosure" efforts, Citi's program allows the homeowner to avoid a completed foreclosure.

The program results in a less severe hit to the borrower's credit score, while the owner must still leave the home after six months.

Particularly those who owe at least 20% more than their home's current value, several housing analysts state these borrowers are choosing to walk away because they see little chance that home prices will come back.

Making the process more time-consuming and expensive for the lending industry, several states have lengthened the time it takes to complete a foreclosure.

Citi's program borrowers will still have to pay their utility bills.

Citi is set to pay at least $1,000 in relocation costs and will consider possibly helping out with other expenses.

Also, Citi has plans to offer relocation counseling.

The program is intended to help borrowers who don't qualify for a short sale or a mortgage modification.

Citi's policy is similar to the policy made public in November by the government-controlled mortgage finance company, Fannie Mae.

Fannie Mae is letting homeowners give back the deed to their properties, then at market rates, rent them back.

Source: homebuilder.com