Citi decides not to play Scrooge for the holidays
"We want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes," the head of Citi's mortgage division told the Associated Press.
Do they get a Hallmark card, too?
I mean, does anybody believe that Citigroup really cares what kind of holiday its customers have? Banks have been dragging their feet so much on loan modifications, it's hard to believe Citigroup or any other bank cares about the type of holiday American families will have.
More likely, Citi's concerns have more to do with the public response to press stories and photographs of people being evicted from their homes just before the holidays. Imagine the Christmas trees and tinsel, along with the usual furniture, littering the lawns of abruptly vacated homes!
I suspect that the government's 34% stake in Citigroup may have been another key factor in the decision. Citi had been hoping to shake off the government yoke, but The Treasury Department delayed its sale of Citigroup stock after the shares received a lukewarm reception from investors. That means Citigroup will remain under government control for at least another year.
By getting Citigroup to take the lead on the foreclosure moratorium, I'll bet the government is hoping other banks - now no longer under its control thanks to the payoffs of their government bailout money - will follow Citi's lead.
But whatever the reason at least 4,000 borrowers will be able to stay in their homes for the holidays thanks to whoever made this happen. Citi will suspend foreclosures starting Friday through January 17, 2010. Only borrowers with Citigroup loans will benefit. Those just being serviced by Citigroup with loans from other investors won't benefit from the foreclosure moratorium.
Citigroup expects that about 2,000 homeowners scheduled for foreclosure sales will benefit from its holiday largess, as well as another 2,000 that were due to receive foreclosure notices. An even better gift would be to send the 100,000 borrowers who have applied for loan modifications under president Obama's plan a note saying that they have secured permanent modifications. But according to the latest data from the Treasury Department, only 270 Citi borrowers had received permanent modifications through the end of November. Citi called the number a "reporting error," and said it would rise dramatically at year-end.
How's that for a lump of coal?
Lita Epstein has written more than 25 books including Reading Financial Reports for Dummies and The 250 Questions You Should Ask to Avoid Foreclosure.