Citigroup Gets Pro-Active In Helping Homeowners
George Boelcke FCI
November 15, 2008
Hurray! Finally, one of the biggest financial institutions in the world is focusing on a pro-active plan, as Citigroup has announced a new pro-active program designed to head off the next wave of foreclosures. It´s called the Homeowner Assistance Program and targets around 500,000 customers who are in, what Citi describes as, "at risk mortgages."
The focus will be on the hardest hit areas of the Southwest, Midwest and California which have seen the biggest drop in real estate values, along with some of the highest impact of job losses.
This initiative does not replace Citi´s extensive current mitigation programs and is not designed for people currently in foreclosure, but rather an additional pro-active program to hopefully slow down the next waves of foreclosures.
Citigroup will review their mortgage files and send letters to clients who may be able to benefit from the program. The fine print is that homeowners targeted by this effort must be current on their payments and hold a mortgage loan which is held by Citi. It is also important to remember that plans and reality are not always the same. A number of other lenders have announced smaller, but similar programs, but work-outs have been slow and painful, helping less than 10 percent of homeowners, in comparison to the announced targets.
It is a good bet, however, to count on Citigroup doing significantly better. They´ve certainly learned from other lenders and have made a commitment to handle these work-outs in a streamlined and quick manner. After all, prevention is way more effective, and way less expensive than foreclosure, which is why Citigroup is prepared to cut mortgage payments to less than 40% of incomes by freezing or adjusting interest rates, stretching terms, or even reducing balances.
As all lenders are discovering, there is a big difference between hype and hope. Hype is the announcement – hope is that Citigroup makes it work for large numbers of families. After all, when hope is gone – foreclosure follows immediately.
At the same time, on a positive note, Primerica Financial Services, a division of Citigroup, has felt much less of the impact of any refinancing, work-outs, and loan nightmare. Their mortgage loans called SMART (Saving Money and Reducing Taxes) were never done through adjustable rates. Primerica never originated a single ARM with their refinance products.
While their clients aren´t immune from market volatility, the vast majority has a consolidation loan and are on-track to becoming debt free (smart!) much more rapidly than the average family. After all, the less debt we have and the quicker we pay off our homes, the less likely we are to be exposed to any financial problems.
Debt free families do not have credit problems, will never be exposed to a foreclosure, are never affected by another wave of credit card interest rip-offs, or the nightmare of being trapped in a lifetime of HELOC payments. Until recently, it´s been pretty lonely teaching the insights to becoming debt free. However from years ago until today, Primerica Financial is the only company featured in my book: It´s Your Money! Tools, tips and tricks to borrow smarter and pay it off quicker! See: http://www.yourmoneybook.com
There is always a direct connection between the amount of debt and the potential for financial trouble. It´s just not something most people saw coming, or wanted to think about, until the new economic and financial realities of this year.
The focus will be on the hardest hit areas of the Southwest, Midwest and California which have seen the biggest drop in real estate values, along with some of the highest impact of job losses.
This initiative does not replace Citi´s extensive current mitigation programs and is not designed for people currently in foreclosure, but rather an additional pro-active program to hopefully slow down the next waves of foreclosures.
Citigroup will review their mortgage files and send letters to clients who may be able to benefit from the program. The fine print is that homeowners targeted by this effort must be current on their payments and hold a mortgage loan which is held by Citi. It is also important to remember that plans and reality are not always the same. A number of other lenders have announced smaller, but similar programs, but work-outs have been slow and painful, helping less than 10 percent of homeowners, in comparison to the announced targets.
It is a good bet, however, to count on Citigroup doing significantly better. They´ve certainly learned from other lenders and have made a commitment to handle these work-outs in a streamlined and quick manner. After all, prevention is way more effective, and way less expensive than foreclosure, which is why Citigroup is prepared to cut mortgage payments to less than 40% of incomes by freezing or adjusting interest rates, stretching terms, or even reducing balances.
As all lenders are discovering, there is a big difference between hype and hope. Hype is the announcement – hope is that Citigroup makes it work for large numbers of families. After all, when hope is gone – foreclosure follows immediately.
At the same time, on a positive note, Primerica Financial Services, a division of Citigroup, has felt much less of the impact of any refinancing, work-outs, and loan nightmare. Their mortgage loans called SMART (Saving Money and Reducing Taxes) were never done through adjustable rates. Primerica never originated a single ARM with their refinance products.
While their clients aren´t immune from market volatility, the vast majority has a consolidation loan and are on-track to becoming debt free (smart!) much more rapidly than the average family. After all, the less debt we have and the quicker we pay off our homes, the less likely we are to be exposed to any financial problems.
Debt free families do not have credit problems, will never be exposed to a foreclosure, are never affected by another wave of credit card interest rip-offs, or the nightmare of being trapped in a lifetime of HELOC payments. Until recently, it´s been pretty lonely teaching the insights to becoming debt free. However from years ago until today, Primerica Financial is the only company featured in my book: It´s Your Money! Tools, tips and tricks to borrow smarter and pay it off quicker! See: http://www.yourmoneybook.com
There is always a direct connection between the amount of debt and the potential for financial trouble. It´s just not something most people saw coming, or wanted to think about, until the new economic and financial realities of this year.
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