What’s are some of the catches?

1. Borrowers lose their home. (Hence the term Deed in Lieu of Foreclosure.)
2. This is a PILOT program for up to 1,000 borrowers; spread over six states so there is no guarantee you will get in and/or it will continue.
3. Borrowers must have clear title. (READ: No other liens such as: 2^nd mortgage, HOA, tax, IRS, water systems, child support, credit card judgments, etc.)
4. Borrowers must have a Citi loan for the first mortgage.  (We assume this means Citi is servicing the loan OR maybe they own the loan. Who knows?)
5. Borrowers must continue to pay utilities & insurance.
6. Homeowner’s association fees will be determined on a case-by-case basis upon Citi’s determination if the homeowner can afford them.
7. Borrowers must maintain the property in its current condition.  (I wonder how they will know if your grass is always the same height.)
8. Borrowers must agree to bi-monthly meetings with relocation specialists. (You foot the bill for gas to drive across town on their schedule.)
9. Borrowers must be at least 90 days delinquent.  (Here’s to hoping they don’t foreclose before your time is up.)
10. Borrowers must occupy the property in question.
11. Borrowers will only be considered for the program after being evaluated for a permanent loan modification and being denied.
12. Borrowers must have been considered for a short sale and denied.

Excerpts from the leader of this fun house…

“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. (Except principal reductions which typically require major litigation.) However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage, in a release.

“The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. The Foreclosure Alternatives Program is another tool in our ongoing efforts to find creative, innovative ways to help our customers across a variety of difficult financial situations.”

Late last year, mortgage financier Fannie Mae unveiled a foreclosure prevention tool called the “Deed for Lease Program,” which allowed borrowers to lease their homes after agreeing to a deed-in-lieu of foreclosure.  (But of course in many cases they instead have their lawyers send nasty letters to the renters advising them that they have been foreclosed and they need to vacate.)

I’m curious, will Citi put into writing that they will indemnify the Borrower if some other party comes forward claiming an interest in the Note.

- The Bank Slayer

Why? Quite simply it doesn’t help you one bit.

I will make a fearless promise…ready…no one in the State of Texas will be foreclosed upon from now until January 5^th! I’m going to give everyone in Texas an extra day past their December 21, 2009 through January 3, 2009 moratorium.  Look how easily I one upped these big banks.

How?  No foreclosures can take place except on the first Tuesday of each month.  So the next possible date is…drum roll…January 5^th!   I know it is a shocker but some of these big banks issue positive looking press releases and commitments even when the promises are hollow.

If you or someone you know is facing a foreclosure situation, don’t count on these guys giving you the extra time you need to get your ducks in a row.  Act now!!

-          The Bank Slayer

The mortgage unit of Citigroup says one in five borrowers who defaults does so willingly, even though they’re able to pay the mortgage. “It’s a very large number, and it’s a very, very significant risk to the housing recovery,” says Sanjiv Das, CEO of CitiMortgage, adding that new government programs to curb strategic defaults may be needed.

Stephanie Armour at USA Today says that nationally, median prices have fallen about 25% from their peak in late 2005, although prices recently have risen compared with prior months this year. The median price in the second quarter — $170,000 — was at roughly the level it was in autumn 2003.

In other geographic regions, the increase in strategic defaulters ranged between 3 times and 18 times more.   A Experian-Wyman study found borrowers with higher credit scores when they applied for their loan were 50% more likely than other types of borrowers to walk away from a mortgage only because they were underwater, even though they could afford to pay. The study was based on an analysis of about 12 million borrowers.

“The most disturbing aspect of this is that it’s becoming acceptable to do,” says Joel Naroff, an economist with Naroff Economic Advisors. “What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They’re saying, ‘Why pay a high amount if they can get something, even a rental, for less?’ ”

Short sales, in which lenders agree to the sale of a home for less than the balance of the mortgage, is an alternative to a strategic default and will help salvage your credit and your financial future.

- The Bank Slayer