Homeowners in danger of losing their house to foreclosure may soon have a way to stay put.
Citigroup recently announced a program that would allow 500 underwater homeowners to hand over their deeds to the bank and become renters in their own homes, reported The Wall Street Journal late Wednesday.
The homeowner will pay the market-rate rent for the area, reported the WSJ, which in many cases will be lower than the monthly mortgage payment (probably not in DC, though). Right now, the targeted homeowners live in Arizona, California, Texas, Florida, Nevada and Georgia, states hit hardest by the foreclosure crisis.
From the WSJ:
Under the program, borrowers would agree to a “deed-in-lieu” of foreclosure, in which they sign over ownership of the property to the lender. This is less costly to the bank and does less damage to a borrower’s credit than a foreclosure. “In addition to helping families by keeping homes occupied, the program assists neighborhood revitalization and stabilization efforts,” Mr. Das said.
Bank of America helped 2,500 homeowners in a similar fashion earlier this year, and Fannie Mae launched a similar program in 2009. Fannie’s program attracted some criticism because of the strict requirements that failed to attract as many applicants as they had desired.
Citigroup is launching the program in partnership with Carrington Capital Management LLC and Oaktree Capital Group. If successful, it may be expanded.
- New Tool Aims to Determine How Valuable a Foreclosure Will Be as a Rental
- Bank of America Launches “Mortgage to Lease” Program
This article originally published at http://dc.urbanturf.com/articles/blog/citigroup_may_help_underwater_homeowners_become_renters/5884
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