Realty Check

Citi Mortgage Reveals What Treasury Won't

Citigroup released its eighth quarterly mortgage data report today, touting the fact that it had helped "approximately 130,000 distressed homeowners with loans it owns or services remain in their homes and avoid foreclosure on mortgages valued at more than $20 billion."

Other banks, like Bank of America , issue similar monthly reports, but what makes Citi's unique is that it is not being shy about disclosing re-default rates.

Take a look:

I've been asking Treasury Department officials to disclose redefault rates on modifications in the Home Affordable Modification Program, or at least to release the number of trial modifications that have been converted to permanent mods. The trial period is three months, so if a borrower misses a payment (redefault) they are supposed to be immediately dropped from the program. The program really kicked into gear in June, so by now, at the very least, we should know how many borrowers have missed a payment.

  • Video: See the CEO of Citi Mortgage on CNBC Here

I was told we'd get the conversion rate in November; now I'm being told it will be in December, in the November HAMP status report. Treasury is also saying that true "redefault rates" will not be available until the end of the first quarter of 2010. I'm not going to argue semantics. I know many lenders have given borrowers extensions on the three month trial in order to get all the paperwork correct, but that has nothing to do with who has and who has not missed a payment. Look, maybe very few people have missed a payment, or fewer than we think, and the program is a huge success. We'd just like to know. 

I realize I may seem like I'm being a pain in this particular government agency's backside, but the only way we can gauge housing's recovery is to gauge the foreclosure crisis, and the only way we can gauge the foreclosure crisis is to know if the government's 75 billion dollar bailout is working as hoped.

Getting back to the Citi report, redefault rates are still running high, even in the second quarter, which would have been when at least some of the bank's modifications fell under the HAMP program. In any case, in the first part of this year, banks supposedly got away from offering just repayment plans, which can often raise a monthly payment, to real modifications that either reduce principal or reduce mortgage interest rates. Redefaults now are likely less to do with a poor modification and more to do with unemployment and loss of home equity.

Kudos to Citi for releasing the data.

Questions?  Comments?