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Mortgage-To-Lease Program

Citi Pilots Mortgage-To-Lease Program In Six Troubled Markets

Citigroup (NSYE: C) is rolling out a pilot program with Carrington Capital Management that would allow several hundred distressed homeowners to stay in their homes as renters.

The Home Rental Program, announced Wednesday, would give eligible borrowers who are delinquent on mortgage payments the option to transfer the property back to the bank and instead pay rent each month.

The mortgage deed would be transferred to Carrington Capital and joint venture partner Oaktree Capital Management, which would service the loans. Citi’s mortgage unit has sold $158 million of mortgages to Carrington and Oaktree to implement the deal.

“CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners,” Sanjiv Das, chief executive officer of CitiMortgage, said in a press release Wednesday. The program “offers eligible borrowers an option to remain in their homes while avoiding the disruption of foreclosure.”

“Managing a program of this nature is not within our area of expertise, so we joined with Carrington, one of the best property management companies in the country, to help make this program work,” he added.

Starting this month, the pilot program will be offered to roughly 500 select homeowners who are underwater and have been delinquent on payments for 120 days. It will be available in Arizona, California, Texas, Florida, Nevada and Georgia. Rent payments are “expected” to be lower than the borrower’s current mortgage obligation, the release said.
Bank of America (BAC) unveiled a similar program in March, which is open to about 1,000 homeowners in New York, Nevada and Arizona.

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