""Citigroup"":http://www.citigroup.com announced on Tuesday that it is initiating a new mortgage program to help the rising numbers of unemployed Americans hold onto their homes. The initiative is aimed at those homeowners whose economic conditions have changed because of the deteriorating national economy, leaving them unable to meet their mortgage obligations.
To offer assistance to this growing demographic, Citigroup said it will temporarily reduce mortgage payments for borrowers who have recently lost their jobs and are at least 60 days delinquent, dropping their payments to an average of $500 a month for three months. The bank will also waive the interest and penalty fees that would normally accumulate during these three months.
To qualify for the program, borrowers must occupy the residence and the mortgage must be owned and serviced by CitiMortgage. Only loans of $417,500 or less will be considered for the program. Citi also said that some homeowners may be eligible for extensions after the 90-day reduction period expires, depending on their situation.
Sanjiv Das, president and CEO of CitiMortgage, told _""CNN Radio"":http://www.cnn.com/audio/radio/winmedia.html_ that he expects the program to help thousands of homeowners whose income has been cut as a result of the worsening economy by reducing their mortgage payments to an amount ""which is effectively less than the price of an average one-bedroom rental nationally.""
Das argues that rising unemployment is the single biggest issue facing mortgage servicers, and he said he hopes others in the industry will follow Citi's lead.
Citigroup has received $45 billion in bailout funds and as a result of recent amendments to the terms of the investment, has lost 36 percent ownership to the federal government.
In January, Citigroup deviated from an industry consensus by publicly endorsing legislation that would allow bankruptcy-court judges to modify mortgage terms - something opponents of the bill refer to as cram-downs. According to a _""Wall Street Journal"":http://www.wsj.com_ report, Citigroup executives said the move, which could ultimately have a negative impact on the company's bottom line, was designed to win favor in Washington.
Das told the _Journal_, though, that the federal government ""had no role at all"" in the bank's newest loan-modification initiative. The new program ""was created by us, developed by us, and is now being implemented by us,"" Das said. ""There was no pressure at all,"" the _Journal _reported him saying.