High-yield/macroeconomics (fka YIELD)

[Preciouslife1]

Citi Will Halt Some Foreclosures, Rework Mortgages (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0fgsmm5MTXI&refer=home
By Elizabeth Hester

Nov. 11 (Bloomberg) -- Citigroup Inc., the fourth-biggest U.S. bank by market value, plans to stem foreclosures as the firm modifies about $20 billion in mortgages, following similar moves by its largest rivals.

Citigroup will reach out to 500,000 homeowners in the next six months who may be at risk of falling behind on mortgage payments, the New York-based company said in a statement today. The bank has helped about 370,000 people, or $35 billion in mortgages, avoid foreclosure since 2007.

Congress has been urging financial-services companies to work with borrowers after foreclosures rose to the highest on record in the third quarter. JPMorgan Chase & Co. said Oct. 31 it will stop foreclosure on some loans as it works to make payments easier on $110 billion of problem mortgages, while Bank of America Corp. said it has modified 226,000 loans this year, including those from Countrywide Financial Corp.

Citigroup is trying to help customers stay in their homes, Sanjiv Das, chief executive officer of the bank's mortgage unit, said in the statement. The company's stock rose 2 cents to $11.23 in German trading.

The bank said on an Oct. 16 conference call that it was suffering a sixth consecutive quarter of deepening losses in the mortgage portfolio. The bank had restructured more than 120,000 loans, including granting extensions, during the first half of 2008, Chief Financial Officer Gary Crittenden said on the call.

Default Notices

A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on during the third quarter, the most since records began in January 2005, data compiled by RealtyTrac Inc. in Irvine, California, show.

Citigroup said yesterday it is ``focusing particularly on borrowers in areas that are likely to face extreme economic distress.''

Home prices in 20 metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak of September 2005.

Citigroup plans to reach out to loan holders who live in their homes and have ``sufficient income for affordable mortgage payments,'' the statement said. The bank will extend a moratorium on foreclosures to those who meet these criteria.

Federal Deposit Insurance Corp. Chairman Sheila Bair has proposed a plan to guarantee mortgages to help stem foreclosures, according to two congressional aides briefed on the matter. Her idea is to use as much as $50 billion of the $700 billion financial-services industry bailout package approved by lawmakers.

JPMorgan's Program

The JPMorgan program is designed to assist 400,000 families with $70 billion in loans in the next two years, the bank said. Another 250,000 families with $40 billion in mortgages have already been helped under existing loan-modification programs.

The bank's program extends to customers of Washington Mutual Inc., the savings and loan JPMorgan agreed to buy in September, and to clients of EMC, the loan-servicing company the bank acquired in its takeover of Bear Stearns Cos.

JPMorgan will hire 300 loan counselors to help delinquent homeowners and employ about 150 people to review each mortgage before it's sent to the foreclosure process.
Other employees will be added to staff 24 new regional counseling centers.

Bank of America announced two plans this year to help reduce customers' payments by as much as $11 billion, including Countrywide borrowers. In total, they will cover more than $120 billion in unpaid balances.

Countrywide, the mortgage lender acquired by Bank of America, agreed in October to help about 400,000 customers facing foreclosure or having problems paying their loans as part of settlement with 14 states over fraud complaints.

Citigroup will also give 14 communities as much as $100,000 each to help restore abandoned homes and those in low-income neighborhoods.

To contact the reporter on this story: Elizabeth Hester in New York at [e-mail].

Last Updated: November 11, 2008 04:20 EST