Many lenders and mortgage servicers, including Citigroup, have increased the number of loan modifications they are offerings homeowners that are outside of the federal government mortgage assistance programs. These types of alternative modifications are usually more successful as well. Recent reports by both private analysts as well as the government show that the number and quality of loan modifications that mortgage servicers make on their own are growing when compared with a year ago. These same studies show that the vast majority of modifications now being made are in fact reducing borrowers' payments, and this is most often by reducing interest rates and extending loan terms on the loans in question.
When a borrower contacts Citi for help, the bank will usually first refer people to the federal governments Home Affordable Modification Program (HAMP). They are walked through the process to determine if they are eligible for aid, will apply, and go through the process. After this review both the homeowner and Citigroup may decide that HAMP is not the best option, so they will then explore other options and programs for the borrower.
As just some of the options that will be considered, homeowner will often be considered for Citi's alternative loan modification programs. They include the following:
At the end of the day the impact to the homeowner will vary. Unfortunately sometimes loan modifications in early years resulted in higher payments for the homeowner who requested help as they made up for delinquent payments or escrow was established to pay back insurance or property taxes. As Citigroup has begun to address the needs of homeowners in this weak housing cycle, they will do all that they can to ensure that virtually all the mortgage payments that an individual needs to make are even less on a principal and interest basis.
The programs and alternative loans tend to be successful. For example, so called re default rates for loans serviced by Citi and modified between the fourth quarter of 2008 and 2009's fourth quarter did not exceed 32%. this is better than the Obama plan. In addition, they have also shown some improvement in last year's fourth quarter, so the alternative loan modification programs success rate continues to improve.
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