By Elizabeth Hester
Nov. 11 (Bloomberg) -- Citigroup Inc., the fourth-biggest U.S. bank by market value, said it will halt certain foreclosures as the firm modifies about $20 billion in mortgages, following similar moves by its largest rivals.
The bank plans to reach out to 500,000 homeowners in the next six months who may be at risk of falling behind on mortgage payments, the New York-based firm said in a statement. The bank has helped about 370,000 people, or $35 billion in mortgages, avoid foreclosure since 2007.
Congress has been urging financial-services companies to work with borrowers and avoid foreclosures, which rose to the highest on record in the third quarter. JPMorgan Chase & Co. said Oct. 31 it will stop foreclosure on some loans as it works to make payments easier on $110 billion of problem mortgages, while Bank of America Corp. said it has modified 226,000 loans this year, including those from Countrywide Financial Corp.
Citigroup said it's trying to help customers keep their homes ``in today's economic environment,'' according to Sanjiv Das, chief executive officer of the bank's mortgage unit.
Citigroup said on an Oct. 16 conference call that it was in its sixth consecutive quarter of increasing losses on the mortgage portfolio. The bank had restructured more than 120,000 loans including granting extensions and other modifications in the first six months of the year, Chief Financial Officer Gary Crittenden said on the call.
Default Notices
A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the third quarter, the most since records began in January 2005, according to Irvine, California-based RealtyTrac, which sells default data.
``Citi is focusing particularly on borrowers in areas that are likely to face extreme economic distress,'' the release said.
Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak of September 2005.
Citigroup plans to reach out to loan holders working with the bank, who live in their homes, and have ``sufficient income for affordable mortgage payments,'' the statement said. The bank will extend a moratorium on foreclosures to those who meet these criteria.
Federal Deposit Insurance Corp. Chairman Sheila Bair has proposed a plan to guarantee mortgages to help stem foreclosures, according to two congressional aides briefed on the matter. Her idea is to use as much as $50 billion of the $700 billion financial-services industry bailout package approved by lawmakers.
JPMorgan's Program
The JPMorgan program is expected to help 400,000 families with $70 billion in loans in the next two years, the bank said. An additional 250,000 families with $40 billion in mortgages have already been helped under existing loan-modification programs.
The bank's program extends to customers of Washington Mutual Inc., the savings and loan JPMorgan agreed to buy in September, and to clients of EMC, the loan-servicing company the bank acquired in its takeover of Bear Stearns Cos.
JPMorgan will hire 300 loan counselors to help delinquent homeowners and employ about 150 people to review each mortgage before it's sent to the foreclosure process. Other employees will be added to staff 24 new regional counseling centers.
Bank of America announced two plans this year to help reduce customers' payments by as much as $11 billion, including Countrywide borrowers. In total, they will cover more than $120 billion in unpaid balances.
Countrywide, the mortgage lender acquired by Bank of America, agreed in October to help about 400,000 customers facing foreclosure or having problems paying their loans as part of settlement with 14 states over fraud complaints.
Citigroup will also give 14 communities as much as $100,000 each to help restore abandoned homes and those in low-income neighborhoods.
To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net.
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