Citi�s Deed-In-Lieu Of Foreclosure Offers 6 Months Free Rent

[DebtStinks]

http://www.nytimes.com/2010/02/11/bu...l?ref=business

[DebtStinks]

I'd probably take this deal if BofA adopted a similar plan... wonder if it's a trend that will spread to other lenders.

[HakunaMatata]

Are we on the brink of BOBs (bailed out banks) conceding to positive consumer change or is this another chocolate-covered scam?

In Michigan, the majority of home owners are entitled to a six month redemption period ("rent free" living) following the Sheriff's Sale. This doesn't include the publication period prior to the Sheriff's Sale (Notice of Sale is four weeks) or potential eviction proceedings (30 days).

So, I have the "opportunity" to sacrifice some "rent free" status in my house and eliminate the possibility of "cash for keys" in order to free Citi from publication/legal fees and permit them to keep bad loans off the books while falsely reporting property values? Who benefits in such a scenario? Oh wait...my credit score won't be as harshly affected. Oddly, FICO and Citi don't foster similar views:

http://www.myfico.com/CreditEducation/Questions/foreclosure-alternatives-fico-score.aspx

I question "less painful for our borrowers as well as for us".

[LimpDisc]

What a bunch of knuckleheads! You can stay much longer rent free and take the same hit on your FICO score without this program.

[StartingOver08]

What a bunch of knuckleheads! You can stay much longer rent free and take the same hit on your FICO score without this program.

+1

[DeadManCrawling]

This is a back-door admission by Citi that they have a vast wasteland of defaulting properties and zero idea what to do with them.

If I were a Citi stockholder I would be SELLING every last share.

After 6 months, a large percentage of these people will be told, "Citi is generously extending the period for ANOTHER 6 months . . ."

This benefits Citi in two ways: Keeps defaulted mortgages off their books while they scramble for a solution or wait for the government to toss more bailout money toward mortgages.

And it provides a carrot for debtors, a $1000 insurance policy that they will not loot the house before leaving.

If I were still in the house, I would simply let foreclosure proceed. As noted by others, far more time can elapse, which is better ROI than the 1k pittance.

This could also be Citi's way of "testing" the waters and seeing how many more homes head to default because of the program, sort of an attempt to make those on the foreclosure sideline jump, so they can get a better idea of the scope of the problem.

[DebtStinks]

Really depends on where you are in the process....

Been here rent free for 13 months... I want closure on this crap and am ready to move on. In CA you can go from NOD to out in 4 months. I'm post bankruptcy so the difference between a DIL and a standard foreclosure isn't a big deal... both are a 3 year wait on a new FHA loan and won't impact my credit.

But if I could sign off on a DIL and get the timer rolling on my 3 year wait now while living in the house for another 6 months... god I'd do it in a heart beat. Not really sure how they would execute it... I would assume they want the DIL executed and then somehow offer a 6 month lease at no cost or whatever. It's all about having options... it's finally something new at least. The loan mod programs are a complete joke if you are underwater any significant amount.

I'm just surprised to even see them doing it... it could open the floodgates on foreclosures for them. One of the big deterrents to foreclosure is fear and uncertainty. How many people are stuck in underwater homes and just keep paying because they don't understand the process to get out? A program like this creates a simple and clear exit strategy for people in these underwater homes. Hell look at the stories around here... people freak out and move from their homes after a couple of missed payment because they think the sheriff is going to show up and put their kids and stuff out on the front lawn. Then they look back and see their house sit empty for 2 years. But if they could see an easy out like this... sign over the house, live for 6 months rent free, get a little extra cash for moving, no auction sign stapled to your home, no worries about the sheriff showing up, etc. To me it seems like this deal could open the door to a ton of folks that want out but are just too scared to do it.

Clearly this isn't a good choice for everyone... but it's a new option on the table and I think it could be a benefit to some folks. If you have your act together and know your states foreclosure system then sure you would be MUCH better off riding it out though a standard foreclosure. But unfortunately the vast majority don't fit that description. It's just very interesting to see all of this play out.

[limage]

I wonder if they offer this to people who have surrendered their home in BK.

[DebtStinks]

I wonder if they offer this to people who have surrendered their home in BK.

BK or not... the process is the same to foreclose on a house. I'd guess that it wouldn't matter as long as your still living in the house. But that's just my guess.

[DebtStinks]

Here is the full press release directly from Citi:

http://www.citigroup.com/citi/press/2010/100211a.htm

Funny that their pilot program doesn't doesn't include some of the areas with the hardest hit home prices (CA, FL, NV).

[bulletproof77]

And meanwhile, what does Bank of America (probably the largest servicer of delinquent loans in the country) offer to distressed homeowners ? Nothing except confusion, denial and back door "mod's" that do nothing for the homeowner. I would also respectfully disagree with a poster above who stated that in California you can go from NOD to "out" in 4 months. I am going on 2 YEARS since last payment, 6 months since NOD and still absolute silence from Bank of America. I think they like keeping people in limbo.....Take my house..PLEASE

[DebtStinks]

And meanwhile, what does Bank of America (probably the largest servicer of delinquent loans in the country) offer to distressed homeowners ? Nothing except confusion, denial and back door "mod's" that do nothing for the homeowner. I would also respectfully disagree with a poster above who stated that in California you can go from NOD to "out" in 4 months. I am going on 2 YEARS since last payment, 6 months since NOD and still absolute silence from Bank of America. I think they like keeping people in limbo.....Take my house..PLEASE

I with ya man... my first is with BofA as well. I'm 13 months out with no payments, no NOD, and not a single word from them. My point was that under CA law once you get the NOD you CAN be out as early as 4 months if the bank follows though. I've got a wife and 2 small kids... I'm not sure I can deal with the stress of not knowing when we'll have to leave and how long we will have to get out. So odds are when we get our NOD (god knows when that will happen) I'll use that as our 4 month warning and be gone. Which is exactly why I'd be all over a DIL for 6 months more of free rent if they offered it.

[bulletproof77]

No, I tried that DIL route...All it does is benefit the bank, your credit takes the same hit. And you get the pleasure of listing your house and if you do get any offers the bank will promptly reject them. Until you get a Notice of Trust Sale (which 2 YEARS later I have still NOT gotten) stay put and enjoy the ride. By the way, renting after a BK and foreclosure is NO problem in Southern California. Rents are down, vacancies are way up and landlords are VERY understanding. Heck, I'm thinking of moving back in and riding the free rent thing some more. I told BofA that just to see if it would make them move faster...Nope, didn't do a thing..