We’ve all seen the numbers when it comes to foreclosures and unemployment-things are about as bad as they have ever been. For homeowners struggling to pay their bills who suddenly lose their job, things are obviously even more difficult right now. In an effort to help customers in this situation, Citigroup has announced a program to alleviate some of the financial burden from borrowers in this situation.

For mortgage holders who have lost their jobs and are at least 60 days behind on their mortgage payments, Citigroup will reduce their minimum monthly payment to levels around $500 per month for a three month period. Mortgage holders will not be hit with additional fees or interest for the three months when their payments are reduced. This offer will be available only to customers who live in the home and who have a mortgage loan balance that is lower than $417,500. They must provide proof that they are unemployed and agree to inform Citigroup if they find a job.

This is great news for Citigroup customers because before this announcement, it was almost impossible for a person with a dramatic reduction in income to work with a financial institution to refinance or modify a loan. Although there is no guarantee that other lenders will provide similar programs, there is a good deal of speculation that other banks may follow suit.

It is unclear how much influence the federal government had in this decision, although by increasing their stake in Citigroup to 36% last week, they certainly have the ability to influence decisions within the bank, which has received over $45 billion in taxpayer bailout dollars to date. The company is denying that there was any government involvement in the decision.

The decision is good for unemployed homeowners, but it should also help Citibank because it will provide a window of time that homeowners can take to get back on their feet and hopefully avoid the next step after default, which is generally foreclosure. With banks taking massive losses related to bad loans, this program could end up saving the bank as much or more than it costs to receive reduced payments for a few months.

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Tags: Citigroup, foreclosure, homeowners, Loans, unemployed

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