Homeowners are walking away from mortgages and preferring to default if they have an underwater mortgage, meaning they owe more then their home is worth, and as a result they are allowing their credit to take a big hit by just not paying their mortgage and waiting to be evicted.
However, Citigroup has begun a trial program that allows homeowners to just turn over their deed and avoid foreclosure. On top of this, Citigroup is allowing homeowners to stay in their home, paying only utilities, cable, and the like for six months.
This program is set in place to avoid having to go through the foreclosure process with homeowners, which is not beneficial to either homeowners or lenders like Citigroup. After the six months has passed homeowners will have to vacate the home but the time between turning in the deed to their home and vacating the house will hopefully allow homeowners to perhaps save money, find an affordable apartment or alternative residence, and on top of that Citigroup is providing other forms of aid to these homeowners
Again, the program from Citigroup is only a trial for the present time but with so many homeowners owing far more then their home is worth, defaults are taking their toll on big lenders and a program such as this is hoped to provide options for homeowners who can’t afford their mortgage currently.
Many view this program as a favorable alternative to foreclosure, but others say that programs like a “deed for lease” program would allow homeowners to stay in their home and just rent for at a rate comparable to an apartment, but opponents of this idea say most renters are finding they can pay a mortgage for less or equal value to an apartment.
Regardless of differing opinions, hopefully this new program allowing homeowners to stay in their home for six months mortgage free after surrendering their deed will aid many homeowner who are unable to pay their mortgage.
