TEXT OF STORY
Steve Chiotakis: It is yet another finance company that’s reaching out to try and alleviate the crunch that’s befallen the mortgage industry. People are defaulting on loans, and some companies are trying to pull the trigger on help rather than foreclosure. Today, in the shadow of at least one other mortgage big shot, Citigroup is launching such a program, which expects to help around 130,000 borrowers refinance. It’s not
a handout, though, as Marketplace’s Jennifer Collins reports.
Jennifer Collins: If you’ve got a home loan with Citigroup, you may soon be getting a call. The bank is planning to reach out to half a million borrowers.
Sound familiar? Just days ago, JP Morgan announced a plan to help borrowers by announcing a moratorium on foreclosures for 90 days. But Citi’s plan is different — they plan to keep borrowers paying, even if it’s only a tiny amount.
Sanjiv Das, the head of the company’s mortgage department, says this approach is more realistic:
Sanjiv Das: A 90-day moratorium is not going to fix the problem for those people who have lost their jobs. Think about the borrower on the 91st day — they will be foreclosed on.
Under the plan, a homeowner with a $300,000 loan could being paying as little as $500 a month for a few years, he said.
Management consultant Peter Cohan says plans like Citi’s sound great, but:
Peter Cohan: People will be skeptical and wait to see whether it actually amounts to anything more than just a nice press release, and see whether there’s actually tangible results to come out of it.
Cohan says the U.S. government needs to step in to prevent foreclosures expected over the next two years.
I’m Jennifer Collins for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.