1 out of every 8 mortgages in the United States right now is currently in default. With rising unemployment rates rising and home values sliding, many sub-prime borrowers are finding that they simply cannot afford their mortgage payment. Others who bought during the housing boom are finding that they owe more on their home than it’s worth. These economic conditions are leaving banks in bad shape and now they are trying to clean up the mess.
Through the Whitehouse’s Home Mortgage Affiliate Program (HAMP), homeowners that owe more on the value of their home than it’s worth or are otherwise having trouble paying their mortgage will be able to modify the agreement of their loan so that they can make their payments instead of getting foreclosed upon.
Unfortunately for borrowers, banks are overloaded with requests for refinances and work-out plans and have not done a very good job at helping troubled consumers. Fortunately, banks seem to be getting their act together. Citibank (NYSE: C) announced Tuesday that it had increased the number of borrowers the company was able to help by 29% in the 2nd quarter of 2009 compared to the 3 months prior. In total, Citibank helped 108,000 borrowers nationwide through workout plans and other arrangements. Citibank reports that it has helped 625,000 borrowers stay in their homes since the housing crisis began in 2007. These troubled loans totaled over $67 billion.
In a recent Associated Press Article, Rebecca Macieira-Kauffman, president of Citibank California stated, “We’re not out of the wood yet. At Citi we’ve been very focused on keeping people in their homes.”