Citi's Deed in Leiu Program

Citibank announced today that it will allow homeowners to stay in their homes for up to 6 months in exchange for the deed to the property. The deed is given back to Citibank in "lieu of foreclosure" at the end of the 6 months and Citibank will offer a $1000 relocation allowance as well. In certain circumstances Citibank may even pay some additional monthly property expenses if Citibank determines the borrower can no long afford them. As part of the agreement, the borrowers must maintain the property in current condition and agree to bi-monthly meetings in which trained relocation professionals will help the borrower on the next step of their lives.

This is a pilot program and is part of the deed in lieu of foreclosure and short sale program the Treasury is doing in the HAFA (Home Affordable Foreclosure Alternative)Program, part of the larger HAMP (Home Affordable Modification Program).

One note here is that Citibank doesn't mention this tidbit, but HAFA requires a full release of debt and waiver of all claims against the borrower. In short the borrower is permanently off the hook. First program of its kind and it will be interesting to see what happens down the road. What will they do it 1/3 or more off all their mortgages are given back? Sounds very expensive to me.