Gallagher & Associates Team

Gallagher & Associates Team

Thursday, December 31, 2009

Citigroup to Halt Foreclosures

Shortly after Chase announced a 90 day moratorium on foreclosures Citigroup announced that it was going to halt foreclosures and evictions in connection with mortgages it holds. While this might appear to be a measure of corporate good will, the devil is in the details.

The suspension of foreclosures and evictions only lasts for 30 days, after that all foreclosures and evictions will resume. Next, the suspension does not affect mortgages Citigroup services. So the suspension does not apply to you if your mortgage gets paid to Citigroup but is owned by someone else. Only 4,000 people are going to be affected by this nationwide suspension.

The move by Citigroup is likely in response to the Obama administration's criticism of lenders complying with the "Home Affordable Modification Program." As a result, the administration announced several steps intended to increase modifications including: (1) In house daily monitoring of mortgage companies & servicers by Treasury Department "SWAT" Teams to ensure companies are processing modifications; (2) Withholding inducement payments to lenders and servicers until modification becomes permanent; and (3) Public "shaming" of servicers and lenders that are not actively modifying loans by the release of a list of servicers/lenders who are not modifying loans.

As of October 650,000 borrowers (or 20% of those eligible) applied for modifications, but only 1700 resulted in permanent modifications

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