Did walking away from your CitiMortgage just get easier?
CitiMortgage, a CitiGroup mortgage provider, announced the launch of a pilot project this week. The new program will allow distressed homeowners to hand over the keys and walk away, under certain conditions.
The notion of “deed in lieu of foreclosure” isn’t a new one. It’s the idea that you can convince your lender to take the house instead of having them run you through the gauntlet of foreclosure proceedings. It can save a lot of headache and potentially even have less of an impact on your credit score.
In both cases, the owner of the house loses their home for failure to make payments. A deed in lieu of foreclosure is just a more streamlined process, one that reduces legal fees the lender would have to spend on foreclosing.
Another possible advantage of this program is that Citi will forgive the difference in the mortgage amount and the value at the time of the repossession. This would eliminate the fear of deficiency judgments. The program will be offered in six states: Texas, Florida, Illinois, Michigan, New Jersey and Ohio.
Although there is much hype about this program, is it really a novelty in the world of foreclosure alternatives? Truth be told, the Citi program is just a more streamlined deed-in-lieu program. It’s just a memorialization of terms that distressed homeowners may already have been entitled to.
So how is that anything new? It’s really just the simplification of something that already existed. Or rather, it’s normal deed-in-lieu process with some clever public relations packaging.
As CitiMortgage’s CEO puts it: “It’s deed in lieu on steroids.”
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