If you are unemployed and 60 days or more behind on your payments to CitiMortgage, help may soon be on the way, according to the Wall Street Journal. Citigroup is expected to announce a program today to temporarily decrease mortgage payments on loans of $417,500 or less to ~$500 a month for homeowners collecting unemployment. The program for those who have recently lost their job will also waive interest and penalties during the three month period of lower payments.

The program is a great idea, though I wonder about the execution and some of the exclusions. Why does this mortgage modification require 60 days of delinquency and exclude homeowners with jumbo mortgage loans?

The city of Houston, Texas had a problem. They had $400,000 or so left over in their budget earmarked for efforts to rebuild the area from Hurricane Ike. Generally, extra money in the budget is a good problem to have. But given the nation’s real estate market and current economic climate, some people in the city wanted to put that money to work.

Houston Mayor Bill White proposed a plan to use the money to pay down some of the debt of prospective first time home buyers. Houston already has a program to provide down payment assistance to lower income home buyers in some neighborhoods which it would like to revitalize. However, some applicants’ credit scores fell just short of the number needed to qualify for the program. The solution to its problem of too much money in both programs: give the homebuyers’ money to pay down their debt and boost their credit score.

President Obama announced his housing plan to avoid foreclosure of homeowners who are currently paying their mortgage but are not likely to be able to do so for long through little fault of their own. The program is also designed to stop foreclosure on homeowners who could afford a lower payment if they could get their mortgage refinanced at current market interest rates. The Obama housing plan is known as the Homeowner Affordability and Stability plan and is estimated to help 7 to 9 million people at a total cost of $275 billion.

Unlike current programs to prevent foreclosure, the Obama housing plan doesn’t require that the homeowner be behind on their payments to enter the program. And for homeowners qualifying under the foreclosure plan, the federal government also will make payments of up to $1,000 a year for five years toward the homeowner. That’s a $5,000 reduction in the principal of a mortgage for simply making your mortgage payment on time every month for the next five years!

Loyal readers may have noticed that I haven’t yet done my review of government and lender mortgage modification programs.  It’s not that I haven’t been thinking of issues related to foreclosures.  It’s simply that I’ve been too busy to sit down and put the work into the post that the topic deserves.  I hope to [...]