CitiMortgage Program for Nevada ??

CitiMortgage launched a highly encouraging pilot program on Friday that is designed to address the hard realities of people heading for foreclosure in a more productive way for all concerned. Initially rolled-out as a test case in six states, the new process will be implemented nationwide by Citi if positive results warrant the expansion. One can only hope that Nevada is included at some point, as the Las Vegas real estate market would certainly benefit from this attractive foreclosure alternative. How does the program work? Here is an explanation from CNNMoney.com:

Instead of borrowers falling further and further behind on their mortgages, leading to an eventual foreclosure sale, they can stay in their homes for up to six months, if they agree to then hand over the deed to CitiMortgage. The borrowers the program targets are already seriously delinquent, having missed at least three monthly payments, and are well on the road to losing their homes. It includes a pledge from CitiMortgage that it will pay the borrowers a minimum of $1,000 to help with relocation expenses. Citi will also forgive any difference between the value of the home at time of repossession and what the borrower owes. Once the deed goes back to the lender, the borrowers walk away free and clear.

One of the most attractive features of this program it seems to me is the potential to cool tempers a bit, alleviate a certain amount of frustration and most importantly provide a framework for mutual cooperation. In exchange for relocation assistance and complete debt forgiveness, the resident must keep the property in good condition during the six month transition and pay all utility bills. One can only hope that many people would prefer this process to wrecking the home, throwing the keys on the floor and suffering the credit consequences of a full-blown foreclosure. After all, it’s not like the various loan modification programs are making any significant difference. The percentage of qualifying borrowers actually participating has been disappointingly low, and the percentage of mortgage defaults even after a loan modification has been discouragingly high.

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