‘Deed-in-lieu on steroids’ is how CitiMortgage CEO Sanjiv Das describes the company's new pilot program that is launching in six states Friday.
The pilot, the Citi Foreclosure Alternatives Program, will allow distressed borrowers to avoid foreclosure and remain in their homes for six months by agreeing to sign over their property deeds to Citi at the end of that period. The company says it will also provide a minimum of $1,000 of relocation assistance to aid borrowers' transition to another residence at the end of the program.
The program is being piloted in Texas, Florida, Illinois, Michigan, New Jersey and Ohio.
‘The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives,’ Das told CNNMoney.com. "Not every homeowner has the financial ability to remain in their home.’
Citi will also provide relocation counseling by trained professionals and will cover certain monthly property expenses if Citi determines that the borrower can no longer afford them. Payment of utilities costs will be the responsibility of the borrower. Other costs incurred by the borrower, such as homeowners' ssociation fees and escrow fees, will be determined on a case-by-case basis.
As part of the agreement, borrowers must maintain the property in its current condition and agree to bimonthly meetings during which trained relocation professionals will help the borrower prepare for the next chapter of their lives.
Citi will consider a borrower for the deed-in-lieu program if he or she does not qualify for a modification program or a short sale. In order to be eligible for the deed-in-lieu benefits, homeowners must hold first mortgages with a clear title owned by CitiMortgage, occupy the property and be at least 90 days delinquent on their mortgage payments.
As it evaluates the progress of the pilot program, CitiMortgage will assess whether or not to expand the program to other parts of the U.S. The initial pilot is expected to help as many as 1,000 families.
"We hope others in our industry will join us in helping distressed borrowers across the country," Das added in a media statement Thursday. "By helping avoid the foreclosure process, which can be very stressful and distracting, and keeping people in their homes long enough to make an orderly transition to the next stage of their lives, we are also supporting neighborhood revitalization and stabilization efforts, which are crucial to the nation's economic recovery."
While CitiMortgage has done deeds-in-lieu and short sales in the past, the company is increasingly looking to them as alternatives to foreclosures.