I was reading a blog in an investor portal where the author was suggesting that Citibank is considering a new approach to the current economic crises that has our housing market in a downward spiral.
Apparently the chatter I that Citibank will consider reducing the principal owed on individual homes in an effort to stop foreclosures. Now, the author did not come up with any significant data to back this up...but it is an interesting concept that bears repeating and exploring.
My own take is that the current loan modification and short sale programs just are not working out very well. I know of numerous locals who have not paid a mortgage payment in over a year...and still have not received a notice of default. So what is up with that?
So, from what I gather, the program would be a simple reduction in the debt the homeowner owes Citibank...or any other lender that follows suit. In exchange for not foreclosing, Citibank would then share in any equity, once the home is ultimately sold.
So everyone is pretty much a winner. The homeowner gets to stay put, albeit a prisoner to the home as they can't really move on, until there is equity once again. Neighborhoods are stabilized, Counties and Cites are once again collecting property taxes and Citibank is saving itself a lot of grief by foreclosing on thousands of families...and still in an equity position when it comes time to sell.
Sounds like a winning solution for all involved. Other than the homeowner not being able to move at will, and the fact that this could destroy my REO Listing business prematurely, I say it sounds like a decent solution...now if I only knew if this was real or not...
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