Actions Speak Louder Than Words

In this case it's lack of any action. My list of tough lender / servicers is no secret when it comes to working on Loss Mitigation and completing Short Sales. I don't often put it in writing just based on the fact that the list differs week to week. I will tell you this though, Citigroup has been on my top five 'Hardest to Work With Lenders' for over a year. And just like every other US lender, the pat themselves on the back because they are doing what they can to help. I have a four letter word for them 'LIES!'

The good news is that Citigroup helped 108,000 people avoid foreclosure during the second quarter, a nearly 30% increase from the previous period.

The bad news is that the number of its borrowers at least 90 days behind in payments surged to 4.7%, up from 3.9% in the first quarter.

Still, CitiMortgage CEO Sanjiv Das feels the bank's ramped-up foreclosure prevention efforts can help stem the number of its borrowers falling behind.

"You keep plugging away at the early stages of delinquency and that's how you slow down the number of foreclosures," Das said in an interview.

Citigroup reported Tuesday that for every completed foreclosure, 12 at-risk borrowers get to stay in their homes. Six months ago, the ratio was 1 to 6.

The bank's loss mitigation initiatives include repayment plans, payment extensions, forbearance, and loan modifications.

When borrowers can't afford to stay in their homes, Citi also helps them avoid foreclosure through short sales -- in which a homeowner sells the property for less than what's owed -- and deeds-in-lieu-of-foreclosure, in which a homeowner signs over the house to the bank. The 1 to 12 ratio that it reported Tuesday does not include short sales or deeds-in-lieu.

Total modifications decreased by 5% during the quarter as the bank ramped up its implementation of the Obama administration's loan modification program. The president's program, which gives banks incentive payments to modify loans, requires that borrowers be put into a three-month trial period before the modification is finalized. Citi also has its own modification programs.

The bank, one-third of which is owned by U.S. taxpayers, said the redefault rates for modified loans continued to decline. Only 6.54% of loans adjusted in the first quarter were delinquent after 30 days, compared to 7.67% of loans modified in the fourth quarter and 10.86% of those adjusted in the third quarter.

More troubling, however, is the fact that foreclosures and delinquencies continue to rise. The number of foreclosures in process for Citi-serviced loans increased about 10% from the first quarter, though foreclosures initiated dropped by 14%. Completed foreclosures rose by 5%.

It will be interesting to see if the American consumer takes a hostile position against Sanjiv Das the way they have with B of A CEO Ken Lewis.

Just a thought.

-Christopher Rockey