Citi’s Incentive Mirrors Hyundai’sby Tim Manni
It seems Citigroup has taken a page from Hyundai’s book. Just as Hyundai’s “Assurance Plus” program temporarily pays customers’ monthly payments if they recently lost their job, Citi has announced a similar initiative that temporarily lowers their unemployed customers’ monthly mortgage payment:
Under the program, Citigroup will temporarily lower mortgage payments to an average of $500 a month for certain borrowers who have recently lost their jobs and are at least 60 days behind on their mortgage payments. Borrowers will be allowed to make the lower payments for three months. Citigroup will waive interest and penalties during this period.
Sanjiv Davis, chief executive of CitiMortgage, claims that the program, designed to help thousands, will tackle unemployment — the biggest issue currently facing mortgage servicers.
Citi’s unemployment assistance plan was announced yesterday, one day before the Treasury released the guidelines of the loan mod portion of their Housing Affordability and Stability Plan (HASP). As the government becomes increasingly invested in Citi, and the fact that the bank, despite industry opposition, supports the government’s mortgage cramdown, has led some to question the influence of this incentive:
Mr. Das said the federal government “had no role at all” in the company’s latest loan-modification effort. The new program “was created by us, developed by us and is now being implemented by us,” he said. “There was no pressure at all.”
Who qualifies for Citi’s program?
To qualify for the program, borrowers must live in the home and have a mortgage that is owned and serviced by CitiMortgage. The program applies only to loans of $417,500 or lower. Citigroup holds 1.4 million mortgages on its books. It also services another four million loans for others, but those don’t qualify for the program.
Despite Citi’s assurances, do you believe Washington had any influence on this program? It will be interesting to monitor how this program will progress, and if Citi will release its results; according to the Wall Street Journal, Citigroup declined to provide figures on the number of loans modified under their previous loan mod program.