Thursday, February 11, 2010

Citi's Deed-in-Lieu Program, COP Report on CRE, and Greece

by Bill McBride on 2/11/2010 03:06:00 PM

A few stories of interest ...

  • Press Release: Citi to Pilot Foreclosure Alternatives Program to Help Distressed Borrowers
    In exchange for the deed on their property, CitiMortgage will allow borrowers to stay in their homes for a period of up to six months. At the end of the six months, the borrower will turn over the property deed to CitiMortgage, and CitiMortgage will provide a minimum of $1,000 in relocation assistance to the borrowers. Citi will also provide relocation counseling by trained professionals and will cover certain monthly property expenses if Citi determines that the borrower can no longer afford them. Payment of utilities costs will be the responsibility of the borrower. Other costs incurred by the borrower, such as homeowner's association and escrow fees, will be determined on a case-by-case basis considering the borrower's specific financial circumstances. As part of the agreement, borrowers must maintain the property in its current condition and agree to bi-monthly meetings during which trained relocation professionals will help the borrower prepare for the next chapter of their lives.
    This is a pilot program, but this is part of the short sale / deed-in-lieu movement that will be a huge story this year. This is being driven by the Treasury's HAFA program - and this is why I think foreclosures will be down in 2010, but total distressed sales up. Although Citi doesn't mention it, HAFA requires a full release of the debt and waiver of all claims against the borrower.

  • The TARP Congressional Oversight Panel put out a report today on Commercial Real Estate (CRE): Commercial Real Estate Losses and the Risk to Financial Stability. This isn't anything new, but it provides a good overview of the CRE issues.

  • On Greece. As expected there was a political announcement of support today, but few details. From the NY Times: Europe Commits to Action on Greek Debt
    European leaders ... promised “determined and coordinated action” to safeguard the euro as they sought to persuade jittery bond market investors that Greece would not be allowed to default on its government debt.
    Further work by finance ministers on assistance for Greece, and the conditions that would be attached to any aid, will take place early next week.