We have seen over the past months that there are some mortgage servicers who are pressing alternative programs like the short sales or deed in lieu of modification plans, as a way to hopefully avoid long and drawn out foreclosure processes, as well as help homeowners transition and keep foreclosed properties from sitting empty on the housing market, but in some areas there are servicers like Citigroup who has seen decreases in these short sales and fees in lieu of foreclosure programming in specific parts of their loss mitigation efforts. As an example, homeowners who were unsuccessful at acquiring a modification from the federal Home Affordable Modification Program have various options that may allow them to either keep or transition from their home without foreclosure, but we have seen some decreases in the cumulative totals of the information provided on Citigroup’s efforts in these areas.
The Treasury Department released data here in October that has given us information through the month of July on Citigroup’s short sale and deed in lieu of foreclosure plan and between June and July it was reported these programs decreased from 1,736 to 1,729, for homeowners whose trial modification was canceled. Furthermore, this total that has been tracked for Citigroup in these areas also indicated that there was a drop from 1,679 short sale and deed in lieu of foreclosure plans in June to 1,464 assistance options made available to homeowners in July when they were denied a trial modification altogether.
Again, these totals offered by the Treasury Department are through the month of July and only track the disposition path of homeowners in these specific areas of the federal modification initiative who have been unsuccessful, and does not necessarily mean that homeowners with Citigroup are not receiving short sales or deed in lieu of foreclosure opportunities as a way to avoid a formal foreclosure. In fact, earlier this year we saw reports that Citigroup was averaging around $12,000 in terms of how much borrowers received after a short sale, as many servicers are using these methods of homeowner transitions as a way to unburden the housing market from certain problems that have been in place for quite some time causing a backlog of foreclosed homes sitting empty in the housing market and property devaluation.
While homeowners are always stressed by financial advisers to seek out ways to find more affordability on their home loan payment before turning to these alternatives, there are some homeowners who may be in a position where foreclosure prevention plans simply will not help and, in cases where short sales and deed in lieu of foreclosure plans are available, some homeowners may stand to benefit from these assistance plans as they will help a homeowner transition from their home, which may have been a great financial burden, and their arguments that these plans may help distressed homeowners get into a position where they can begin attempting to recover their finances and stabilize their financial life much sooner than if they had been fighting a losing battle against foreclosure. Again though, these programs are not available to nor beneficial for every homeowner, and for this reason homeowners can explore alternative plans that may help them avoid the loss of their home altogether.