Home Sales Stall; CitiMortgage Forclosure Option

Today the National Association of Realtors announced that existing home sales dropped in January by 7.2% from December. The median sales price in the nation was $164,700, the same as a year before, but down 3.4 % from December. Wednesday the government announced that sales of new homes dropped 11% in January to a record low.  Wednesday the Mortgage Bankers Association announced that last week mortgage applications declined 8.5 % on a seasonally adjusted basis, for the lowest mortgage demand in 13 years. Numbers declined despite the extension of the homebuyer’s tax credit to this spring.

Unemployment continues to drag down the economic recovery.  This week the Senate passed a jobs bill. It moves to the house where passage is far from certain. It’s assailed on the right for increasing the deficit, on the left by those who insist that it’s not doing enough to create minority job growth in communities where unemployment is at Depression era numbers. Yesterday Sen. Jim Bunning (R-KY) announced that he would launch an old fashioned Senate filibuster to block an extension of unemployment and COBRA health insurance benefits. His efforts continue today.

Continued weakness in the housing market has caused CitiMortgage, one of the nation’s biggest home loan servicers to rethink its foreclosure prevention strategy.  Beginning this month, distressed borrowers in Texas, Florida, Illinois, Michigan, New Jersey and Ohio can take advantage the Citi Foreclosure Alternatives Program. It’s a pilot plan that will enable homeowners with no options left to avoid foreclosures and stay off the streets.

“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage.

Citi Foreclosure Alternatives is an expanded deed-in-lieu-of-foreclosure program that will allow homeowners at foreclosure risk to remain in their homes for six months by agreeing to sign over their deeds at the end of that time frame. Since CitiMortgage will not have to go through the time and expense of foreclosure, it will instead offer distressed borrowers relocation assistance of up to $1000 along with mandatory bi-monthly relocation counseling. Borrowers must maintain the property and pay utilities. Homeowner fees and other ancillary expenses will be decided on a case by case basis. To qualify borrowers must be at least 90 days in arrears on the mortgage. The home must be owner occupied. The plan applies to otherwise unencumbered properties with first mortgages held by CitiMortgage.

The program is not designed to encourage strategic default, where underwater borrowers who can pay, simply walk away from their homes. The first step for anybody interested in Foreclosure Alternatives is to apply for a permanent mortgage modification. For borrowers who don’t qualify for a loan mod, CitiMortgage will explore the option of a short sale for the property where it accepts an offer for the home that doesn’t cover the outstanding mortgage balance. If a sale does not come through, Citi Foreclosure Alternatives will be made available. The program could be extended to other states, depending on its initial success.

According to Sanjiv Das, CitiMortgage’s CEO “By helping avoid the foreclosure process, which can be very stressful and distracting, and keeping people in their homes long enough to make an orderly transition to the next stage of their lives, we are also supporting neighborhood revitalization and stabilization efforts, which are crucial to the nation’s economic recovery.” For immediate help with your CitiMortgage, click here.

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