Citi launches rental effort for distressed borrowers
Citigroup is starting a program to allow 500 homeowners in trouble with their mortgages to rent back their homes if they sign over the deed, a step some lenders are taking to help people avoid foreclosure.
The homeowners, who live in Arizona, California, Texas, Florida, Nevada and Georgia, will be offered the chance to rent the homes at market rates if they can no longer afford their mortgage payments, even with a modified loan. The pilot effort could be expanded if it is successful.
Under the program, borrowers would agree to a “deed-in-lieu” of foreclosure, in which they sign over ownership of the property to the lender. This is less costly to the bank and does less damage to a borrower’s credit than a foreclosure.
Homeowners are not required to accept the deed-for-lease program. The leases are expected to be signed at market rates but are likely to be lower than the borrower’s current mortgage payments.