Congress has been urging financial-services companies to work with borrowers after foreclosures rose to the highest on record in the third quarter. What are major banks doing to help homeowners who are at-risk?
According to the Mortgage Bankers Association, more than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June and 500,000 had started the foreclosure process.
But now, banks are becoming more aggressive and modifying their mortgage agreements. Citigroup announced it will not start or complete any foreclosure sales on any borrowers who are trying to stay in their homes if it's their principal residence, the homeowner is working in good faith with the bank, and the homeowner has enough income to make affordable mortgage payments.
In the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments but look like they might need help keeping up with their payments.
Citi says it's devoting 600 salespeople to help these targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan. The bank says it's also working to expand the program and include mortgages the bank services, but doesn't own.
Since early last year, Citigroup says it's helped 370,000 families avoid foreclosure.
And JP Morgan is also taking a pro-active approach to help homeowners at risk. Last month, JP Morgan expanded its mortgage modification program to an estimated $70 billion in loans and that could help as many as 400,000 of its customers. The bank has already modified about $40 billion in mortgages, helping 250,000 customers since last year.
And according to Bloomberg News, Bank of America announced two plans this year to help reduce customers' payments by as much as $11 billion dollars.
Bank of America says on December first, it will modify about $400,000 loans held by newly acquired Countrywide Financial Corporation.
That assistance is part of an $8 billion legal settlement Countrywide Financial reached with state officials last month over fraud complaints.
If your home mortgage is with another financial institution and you're having trouble making payments, call your mortgage lender and ask for help modifying your loan.