Citigroup Puts the Kibosh on Foreclosures
Some 500,000 homeowners with mortgages from Citigroup have a little more emotional insurance today. The fourth largest bank plans to modify $20 billion in mortgages to keep people from having to flee their homes; already they’ve helped prevent about 370,000 people from being foreclosed upon, reports Bloomberg; that’s $35 billion in mortgages. The news comes…
Some 500,000 homeowners with mortgages from Citigroup have a little more emotional insurance today. The fourth largest bank plans to modify $20 billion in mortgages to keep people from having to flee their homes; already they’ve helped prevent about 370,000 people from being foreclosed upon, reports Bloomberg; that’s $35 billion in mortgages. The news comes amid reports that October foreclosures dropped dramatically, and for the second month in a row, to February’s numbers, perhaps thanks to government and corporate shifts in policy and attitude. “Congress has been urging financial-services companies to work with borrowers after foreclosures rose to the highest on record in the third quarter,” they write. “JPMorgan Chase & Co. said Oct. 31 it will stop foreclosure on some loans as it works to make payments easier on $110 billion of problem mortgages, while Bank of America Corp. said it has modified 226,000 loans this year, including those from Countrywide Financial Corp.”
Citi Will Halt Some Foreclosures, Rework Mortgages [Bloomberg]
Citigroup Puts Moratorium on Foreclosures [AP]
Photo by JS300.
The idea of mortgage moratoria is not a new one. It happened many moons ago…during the Great Depression. Although it had a positive short term effect, long term most people agreed that it increased borrowing costs.
Check out this study by a VP of the St. Louis Fed:
http://research.stlouisfed.org/publications/review/08/11/Wheelock.pdf
OK, I’ll hang in there in my little lifeboat. At least I have my two (rented) toilets to feel good about.
“About time that the banks realized that renegotiating with someone to keep them in their home makes more business sense than evicting them and selling the property at a loss.”
Nope! It’s about keeping you a Debt Slave. If you are smart just walk away from that albatross. You credit will be bad but you will have extra money to spend. Screw the banks!
The What
Someday this war is gonna end…
Unless fundamentals are changed.
I can’t help to think that greed will rule the day again. This mortgage restructure and 700 Billion bailout will make some fat cat rich by taking a cut or siphoning the funds. I’m sure they will figure out a way to get a commission from appropriating this money to the sinking homes.
BrooklynButler,
Citibank is “working” with borrowers because they’ve been essentially bribed by the US government (AKA taxpayers) to do so.
Banks normally give many chances to borrowers before foreclosing as a last resort.
Sub-prime mortgages are being turned into rent stabilized apartments. It’s scary.
Also, haz, bear in mind that these days a mortgage “workout” usually doesn’t mean loan foregiveness in the traditional sense. It means some idiot who can’t do math or understand basic financial instruments (probably like Mopar’s friend in California) has their option ARM loan turned into a more traditional product that they are more likely to be able to actually afford.
You did the right thing. Trust me, you are much better off than almost all of these people who are getting workouts.
Nothing will shore up the market. Sit tight. Save for your down payment. Be ready to jump when the time is right.
haz, don’t you worry, prices are going to keep coming down and you will be able to buy. Congratulations on your fiscal health. Prices are not going to be back to peak levels for many, many years.
Guys, talk me down, OK? As many of you know, I rent. I rent because I can’t responsibly afford to buy in NYC, and for now, this is where I want to live (and also, my job is here, and I have one of those advertising jobs that’s hard to come by elsewhere). And I pay all my credit cards, and contribute to my 401K, and live a good clean financial life that Suze Orman would be proud of. But I am feeling like I got played for a sucker, because what I should have done as bought a house I couldn’t afford and then gotten “bailed out” or “restructured.” And I further feel that the efforts to shore up the housing market will ensure that I will NEVER EVER be able to afford to buy anything. So, please, someone with a greater depth of understanding of this mess, help a girl out. I did everything I was supposed to do. Why do I feel so stupid?