Citigroup is joining Bank of America and JPMorgan Chase in the Obama administration’s second mortgage modification program, the company announced today. The program, part of the government’s $75 billion loan help plan, is aimed at so-called piggyback lenders, or those who granted loans to even the least credit-worthy customers for their down payments during the housing boom. Participating lenders will be given incentives to lower payments on second mortgages or to eliminate them entirely. The hope is that lenders who have resisted modifying primary mortgages because they didn’t want to be stiffed on their piggyback loans will now be more willing to grant modifications. Citigroup is already a participant in Obama’s Home Affordable Mortgage Program, which targets primary mortgages. [AP via Crain’s]

Sam Heskel, founder of HMS Associates, who predicts a rise in foreclosures on high-end apartments

From the December issue: While green shoots may have sprouted in some sectors of the New York City residential market, there are plenty of other areas where that is far from the case. Foreclosures continue to ravage neighborhoods throughout the outer boroughs — most notably southern Queens and parts of Brooklyn — and more distress is quietly creeping into the Manhattan residential market. In this month’s Q & A, appraisers, analysts and brokers who follow foreclosures told The Real Deal that while certain areas of the city are starting to level off when it comes to foreclosures, in others it’s difficult to even find a “regular” nondistressed sale. One expert from New York University’s Furman Center said that the third quarter of 2009 saw 6,000 foreclosure filings in the city — the largest number since the research center started tracking quarterly data in the early 1990s. And worrisome trends are on the horizon.

The Obama administration may soon adjust its mortgage modification program to assist low-income households, according to Bloomberg. The altered program would increase the number of borrowers who could qualify for a loan modification, by allowing those homeowners whose mortgage bills are 31 percent below their pretax incomes to restructure their debt. The changes would “expand the universe of those who are eligible to more of those who are in a position of needing government help to get through temporary stress,” Barbara Desoer, head of Bank of America’s home loan unit, said. This expansion is part of an effort to reduce the number of foreclosure filings in the residential market, as analysts warn that 7 million foreclosures are looming.

Some of the money that the Obama administration is spending on the Home
Affordable Modification Program, aimed at homeowners facing
foreclosure, is benefitting corrupt mortgage servicers, an Associated
Press investigation found. Under the program, if a borrower who
received a mortgage modification makes payments on time for three
months, the mortgage servicing company that modified the loan may
receive up to $5,500 for each successful modification. In order to
receive a larger payoff, some companies have turned to illegal
practices. Of the 38 servicers the government is paying to help
distressed homeowners, at least 30 face lawsuits from homeowners and
advocates claiming they charged illegally high fees; 14 have been
accused of misleading customers before the program began; and three
have settled federal predatory collection allegations by pledging to
correct their behavior. The Treasury Department said it has no choice
but to work with all servicers — refusing to work with a
non-reputable firm would deprive homeowners whose mortgages came from
that servicer from getting modifications, said Treasury spokesperson
Jenni Engebretsen. [more]