You can read the comments from yesterday’s post. Borrowers are fed up.
A few frustrated bankers are, too. Said one to me,
“You borrowed the money, you have to repay it. When you sell your home for more than you paid, you don't share your profit with the bank. So why should the bank take a loss for your underwater mortgage?”
Well, if you prefer to just get out of the whole thing, the bank will usually just let you hand over the keys.
Citi today says it has a new program for that with a “foreclosure alternative” spin to it.
The program won't help many - an estimated 1,000 borrowers - but CitiMortgage Spokesman Mark Rodgers said the lender hopes it can be expanded and perhaps adopted by others in the industry.
It is a pilot program that would allow distressed borrowers in Florida (and Illinois, Michigan, New Jersey and Ohio) to sign over their homes to CitiMortgage, avoid foreclosure, stay in the home for six months. At the end of that period, CitiMortgage owns the house. The borrower would get some relocation assistance for moving out.
The benefit for the borrower would have to leave as soon as the bank takes the home over.
The benefit for the bank: Borrowers must maintain the home during those six months. In many cases following foreclosure, houses and the properties fall into disrepair - or worse - and the bank has to spend money and time getting it ready to put up for sale.