Citigroup to Help Jobless with Mortgage Payments

According to a Wall Street Journal report, Citigroup will announce a program today that attempts to help unemployed homeowners make their mortgage payment.

Despite all of the emphasis on foreclosure prevention and loan modifications the latest challenge in battling the mortgage crisis is homeowners losing jobs. Citigroup is launching a new program to give these borrowers some temporary relief.

Under the new program Citigroup will give borrowers a three month reprieve on their mortgage payment obligations, lowering them to an average of $500. This program is for homeowners that have recently lost a job and are at least 60 days behind on their payments.

The Citigroup plan is expected to preempt an Obama administration announcement on guidelines for a massive new loan modification program--a new offensive on a deepening housing crisis.

Danjiv Das, the CEO of CitiMortgage told the Wall Street Journal that they expect to help thousands of borrowers and called rising unemployment "the single bigget issue facing mortgage servicers." This program is expected to be copied by other large servicers to help stem increasing foreclosures.

To qualify for the CitiMortgage program borrowers need to live in the home and the mortgage must be owned and serviced by CitiMortgage. The program is also capped at mortgages less than $417,500. Citigroup currently holds 1.4 million mortgages that it owns and services.

Many investors have considered Citigroup as a prime target for nationalization by the Federal government. Citigroup has received $45 billion in Federal funding and the US now taking a 36 percent stake in the company. This has fueled concern that the company may be making politically, but not financially sound decisions.

Das assured the Wall Street Journal that this latest loan modification program "was created by us, developed by us, and is now being implemented by us." This is not the first time Citigroup has bucked the rest of the banking industry with controversial moves in the mortgage crisis. In January, Citigroup came out all alone in endorsing legislation to allow bankruptcy-court judges to modify mortgages--so call "cram-downs."