Citi announced today that it will let borrowers stay in their homes for six months if they agree to a deed-in-lieu of foreclosure.
In exchange for the deed on their property, homeowners will also get a minimum of $1,000 for relocation assistance and counseling, as well as coverage for certain property expenses if Citi determines the borrower can no longer afford them.
Borrowers must continue to pay utilities on their own, though homeowner’s association and escrow fees will be determined on a case-by-case basis.
So what’s the catch? Well, as part of the agreement, homeowners must maintain the property in its current condition and agree to bi-monthly meetings with relocation specialists.
The upside with a deed-in-lieu of foreclosure is that the borrower is released from the mortgage liability, but the obvious downside is losing their home.
The pilot program, which is expected to help as many as 1,000 families in places Texas, Florida, Illinois, Michigan, New Jersey and Ohio, will begin on February 12.
To be eligible for the program, dubbed the “Foreclosure Alternatives Program,” borrowers must be at least 90 days delinquent, occupy the property in question, and hold a first mortgage with clear title owned by CitiMortgage.
Homeowners will only be considered for the program after being evaluated for a permanent loan modification; for those who don’t qualify, CitiMortgage will also explore the possibility of a short sale.
“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage, in a release.
“The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. The Foreclosure Alternatives Program is another tool in our ongoing efforts to find creative, innovative ways to help our customers across a variety of difficult financial situations.”
Late last year, mortgage financier Fannie Mae unveiled a foreclosure prevention tool called the “Deed for Lease Program,” which allowed borrowers to lease their homes after agreeing to a deed-in-lieu of foreclosure.