Citi Unveils Loan Modification Program; $20B+ In Workouts Expected; Only Applies to Loans It Owns - Excludes Loans It Services For Others

The New York Times reports:

• Citigroup on Monday joined a growing list of financial institutions offering to modify the terms of mortgages for distressed borrowers, unveiling a program to help thousands meet their monthly payments while reducing the bank’s potential for larger losses as the economy erodes.

• About 136,000 mortgage customers are expected to qualify for the program, resulting in the workouts of over $20 billion of loans. [...] All kinds of mortgages will be eligible for modification, not just the most toxic types, like negative amortization loans.

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• Like those at the other banks, Citi’s plan addresses only loans that the bank owns and not the mortgages that it services on behalf of bond investors who own mortgage-backed securities. Banks have less leeway in changing the terms of loans packaged into securities, because contracts that govern them can be very restrictive.

For more, see Citigroup Offers to Ease Mortgage Terms. MortgageServicingIssuesAlpha