Credit Infocenter

Foreclosures Suspended by Citibank until Jan 2010

December 21st, 2009 · No Comments · Mortgages

by Kristy Welsh

(Last Updated On: May 13, 2010)

Merry Christmas?

According to the Boston Globe, Citigroup will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season. The suspension will run through Jan. 17.

You better read the fine print, though. The suspension only applies to borrowers whose loans are owned by Citi. Borrowers who make payments to Citigroup but whose loans are owned by other investors are out of luck.

Why the suspension? Maybe customer service is catching their breath. Citi has enrolled about 100,000 borrowers in the Making Homes Affordable Program, but had made only about 270 (!) of those modifications permanent as of the end of last month, according to a Treasury Department report. But Citigroup said the low number resulted from a “reporting error” and said it will rise dramatically by year-end.

Reporting Error? Nationally, of the 728,000 homeowners who are in trial loan modifications, just 31,382 have been made permanent. There is a lot of finger pointing going on about the low numbers. Lenders say many homeowners haven’t turned in their completed documents. Homeowners say lenders are losing documents.

So once the group of suspended foreclosures are released, is this the end of the foreclosure flood? I think you already know the answer:

  • People are still losing jobs. Despite the fact that we lost only 11,000 jobs last month, we need to start creating jobs in order to get the economy going. According to the census bureau, we are growing in population enough to require 150,000 to 175,000 jobs each month just to prevent job shrinkage. No jobs, no money to make house payments and foreclosures continue.
  • Housing prices could continue to fall putting more people in the underwater situation. In a previous post dated October 13th, we mentioned that 18% of mortgages are 60 days late. Currently , 27% of all mortgages are behind on their payments. In some areas (such as the metro area where I live, Phoenix, AZ), half of all mortgage holders are underwater. The more someone is underwater, the more likely they are to walk away.

Are you shocked or relieved by this announcement by Citi? In my opinion, this is all so much posturing on Citigroup’s part. The foreclosure process, like the mortgage restructuring process, is painfully slow in many of the banks merely because the amount of mortgage defaults are so large and the banks are understaffed.

For an illustration of how long you can actually stay in your home once you stop making payments, review this this blog post. The conclusion reached: many people are staying in their homes for more than a year after ceasing to make payments. Citibank may merely being offering a cover story for why they can’t foreclose homes in a more timely fashion. Just a hunch.

What’s your prediction for 2010? Decrease or increase in foreclosures? Let us know by leaving a comment!

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