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Citigroup To Help Struggling Mortgage Holders
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Citigroup To Help Struggling Mortgage Holders

Economy

Citigroup To Help Struggling Mortgage Holders
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RENEE MONTAGNE, host:

This is Morning Edition from NPR News. I'm Renee Montagne.

ARI SHAPIRO, host:

And I'm Ari Shapiro. Steve Inskeep is on assignment. Citigroup is announcing a new initiative this morning to help more homeowners avoid foreclosure. Citi says it plans to lower mortgage payments for more than a hundred thousand people who have not yet fallen behind on their payments. Other major lenders have launched their own efforts. And the government has been considering taking more dramatic action to stem foreclosures. NPR's Chris Arnold reports.

CHRIS ARNOLD: Whitney Williams has a solid job driving a city bus in Boston. His wife and four kids live here in the same house that he grew up in.

Mr. WHITNEY WILLIAMS (City Bus Driver, Boston): I have pretty much been in this home all my life. It's my parent's home. And it's been over - I would say over 36, 37 years.

ARNOLD: A few years ago, Williams took over the mortgage after his parents got into trouble with high-interest-rate loans. He and his wife borrowed more to fix up the house, which he now knows was a mistake. They owe around $290,000. The payments were a stretch, but Williams says his mortgage broker promised him that he'd be able to refinance and get his payments lower. That wasn't true.

Mr. WILLIAMS: And bills just started kind of piling up on us as well as our mortgage rate just kept getting higher.

ARNOLD: On top of that, Williams' wife had a stroke and had to stop working, and he just couldn't make his payments.

Mr. WILLIAMS: My wife, my mom stays with us now, you know. They are all pretty much dependent on me, you know, and it's tough.

ARNOLD: With unemployment rising and the mortgage mess dragging on, there are going to be a lot more people in Williams' situation. And the industry and government efforts to date haven't done a whole lot. Regulators say about three percent of homeowners on the verge of foreclosure are currently getting meaningful help to stay in their homes. Now several companies are saying that they're going to do more.

Mr. SANJIV DAS (CEO, CitiMortgage): We will work with the borrower to make the payment affordable.

ARNOLD: Sanjiv Das is the CEO of CitiMortgage, which is part of Citigroup. Das says the lender is going to contact homeowners in parts of the country with rising unemployment and big drops in home prices. He expects about 130,000 of them will need help, and they'll be offered lower monthly payments.

Mr. DAS: What we're doing is we are reaching out to these customers proactively before they become delinquent. And we're saying, look, you guys have, you know, a range of options available to you.

ARNOLD: Citigroup, JPMorgan and Bank of America are all now pledging to lower interest rates for more borrowers or take other steps to keep more people in their homes. Some government plans being proposed will go much further. But not everyone thinks that's a good idea.

Mr. MICHAEL BEDNARK (Salesman): This whole notion that everybody is entitled to own a house, that's a bunch of crap.

ARNOLD: Michael Bednark lives in Tigard, Oregon, and works in sales of heavy truck equipment. He called NPR the other day upset about efforts to cut more deals for people who can't pay their loans, especially where taxpayer money is involved.

Mr. BEDNARK: People who bought more homes than they were entitled to own and everything else that went on with it are getting bailed out on my back.

ARNOLD: Many people say they don't like the idea of bailing out a lot of homeowners. In Bednark's case, he says he has compassion for, say, elderly people who were taken advantage of. But he says he and his family always live within their means. They bought a modest house. All around them, though, he saw people borrowing money recklessly, taking cash out of their houses to buy ski boats, motorcycles.

Mr. BEDNARK: It's insane what they were doing. So where is the personal responsibility?

ARNOLD: But more economists are coming to the realization that the housing mess is snowballing, and we could be looking at five, six, or seven million more foreclosures. That would really screw up the economy for everybody. That's why the industry and the government are getting more serious about helping homeowners in trouble. That's encouraging to housing advocates. Bruce Marks heads up the Neighborhood Assistance Corporation of America.

Mr. BRUCE MARKS (CEO, Neighborhood Assistance Corporation of America): The good news is that the major lenders realize they have to do something.

ARNOLD: But Marks says they are not going far enough. He says a plan being pushed by Sheila Bair, the head of the FDIC, would do a lot more. It would give lenders more incentives to cut borrowers better deals. And he says it would help homeowners on a much larger scale than anything that's been done so far.

Mr. MARKS: Her restructure solution can make mortgages affordable for over three million at-risk homeowners, and that was on the verge of being implemented.

ARNOLD: The Bair plan appears to have gotten bogged down in negotiations between the FDIC and the White House. But Marks is hopeful that it can be revived by the Democratic Congress or once President-elect Barack Obama takes office. Chris Arnold, NPR News.

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