CitiMortgage, the mortgage unit of Citigroup Inc., has significantly increased its loan modification offers responding to Obama Administration’s call to intensify and speed up the process to help more troubled homeowners avoid foreclosures.
According to the mortgage servicer, it was able to help 108,000 troubled borrowers avoid the foreclosure process in the second quarter, an increase of about 30 percent from the previous quarter.
The increase is part of the company’s efforts to boost its participation in the federal government’s Home Affordable Modification Program (HAMP) which aims to ease mortgage terms for as many as 4 million mortgage borrowers.
Early this month, the U.S. Treasury said that it would increase pressure on mortgage servicers to speed up the process of modifying troubled loans for eligible homeowners. The federal government hopes that the loan modification program would help stop the drastic drop in home prices and values and lead the way to the recovery of the housing market.
According to CitiMortgage, it has so far placed 27,571 troubled loans on trial mortgage modifications under the HAMP, or 15 percent of the identified eligible loans. These figures are behind the 20 percentage point achieved by JPMorgan Chase and Co. but higher than the 4 percent posted by the Bank of America Corp.
CitiMortgage chief executive officer Sanjiv Das is confident that the company is doing better in its loan modification efforts based on trends indicated this month.
The mortgage servicer was able to boost its loan modification numbers by hiring additional loss mitigation employees. Since the start of this year, the company added 45 percent to its loss mitigation staff for a total of 4,500.
But industry experts said that despite efforts of the federal government and lenders to contain foreclosure, the numbers continue to rise. The disappointment over the lukewarm response of lenders to the HAMP led the Treasury to target of 500,000 loan modifications by the end of November. As of July, the total modifications under the said program reached 200,000.
Meanwhile, 29 percent of homeowners re-defaulted after receiving loan modifications from CitiMortgage, a decline from the number of repeat delinquents the previous year.
Modifications made under the HAMP include reductions in interest rates and extended periods for repayment.
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