CitiMortgage announced a pilot program to offer struggling homeowners a chance to stay in their homes by renting.
The “Home Rental Program” is aimed at about 500 homeowners in six states — Arizona, California, Texas, Florida, Nevada and Georgia.
Sanjiv Das, CEO of CitiMortgage, said, “CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners.”
To make the program work, Citi is selling $158 million in mortgages to a partnership of Oaktree Capital Management and Carrington Holding Company. “Banks are increasingly recognizing that specialty servicers can modify loans in a way traditional lenders can’t,” Rick Sharga of Carrington said.
The banks get the non-performing loans off their books and Carrington/Oak Tree get the loans at a discount, giving them more flexibility to work with borrowers.
To be eligible, borrowers must owe more than their home is worth, be at least 120 days behind on their payment, but still have the resources to make monthly rent payments. The borrower must live in the house.
Borrowers should begin to be notified that their loans have been sold this month. The deed for lease isn’t the first options borrowers will be presented with. Carrington will first attempt to modify the loan and will also work with short sales and deeds in lieu of foreclosure.
CitiMortgage is the latest bank to launch a deed-for-lease program. Bank of America announced its mortgage to lease program aimed at 1,000 borrowers in Arizona, Nevada and New York in March and expanded to an additional 1,500 customers in California in May.