GIVE UP THE DEED TO YOUR HOUSE FOR AN ADDITIONAL SIX MONTHS, NO THANKS!
WASHINGTON – Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property.
Citi said Thursday it is launching the pilot program, dubbed “Foreclosure Alternatives,” this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.
In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi’s program, like other “deed in lieu of foreclosure” efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower’s credit score.
The policy is an attempt to deal with what lenders see as a growing phenomenon: borrowers who choose to default on their mortgages. Close to one in every three U.S. homeowners owe more on their mortgages than their homes are worth, according to Moody’s Economy.com.
Many housing analysts say these borrowers — particularly those who owe at least 20 percent more than their home’s current value — are choosing to walk away because they see little chance that home prices will come back.
Also, many states have lengthened the time it takes to complete a foreclosure, making the process more time-consuming and expensive for the lending industry.
“Why should we all go through the foreclosure process and evict people?” said Sanjiv Das, Citi’s top mortgage executive. Avoiding foreclosure, Das said, is “less painful for our borrowers as well as for us.”
Borrowers in Citi’s program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.
The program is intended to help borrowers who don’t qualify for a mortgage modification or a short sale — one in which the lender agrees to sell a home for less than the total mortgage amount.
Citi’s policy is similar to one announced in November by Fannie Mae, the government-controlled mortgage finance company. Fannie is allowing homeowners to hand back the deed to their properties, then rent them back at market rates.
This is just another example of how the big banks who received a tax-payer bailout are not doing anything to deal with the foreclosure crisis.
What everyone needs to know is that with valid defenses most homeowners can stay in the home mortgage free for a year or two!
If a distressed homeowner choses to accept Citi’s offer then you also must insist that they sign a waiver of deficiency. You see after you walk away from your home and give up any and all defenses you may have to the foreclosure, the bank can still come after you for what you owe on your mortgage. That’s right, you just saved the bank the time, money and effort of foreclosing on your property, only to be sued for a deficiency judgment!
Once again if you want to give up your property and not fight the foreclosure that is your right, but if you do then insist on a signed waiver of deficiency. If Citi refuses to do this then drag out this process as long as you can, while living rent-mortgage free. They may also tell you that they never sign a waiver of deficiency but it is also not in their practice to go after defiency judgments. Don’t believe them. If they don’t sign, you don’t leave! Always seek the counsel of an experienced foreclosure defense attorney.
Posted By George Beckus Esq.
The Golik Law Firm
904-448-5335
