Citi also announced that it will extend its moratorium on foreclosures on mortgages it owns. To qualify, a homeowner has to stay in the home, it has to be the principal residence, the homeowner must work in good faith with Citi and have enough income to pay a more affordable mortgage payment. Citi says it has already saved 370,000 customers from foreclosure in the past two years through this program. Das believes extending the foreclosure moratorium will help an additional 50,000 families avoid foreclosure.
Citi owns nearly $200 billion in mortgages and the 500,000 homeowners it plans to contact represent about $50-55 billion.
The initiative only provides assistance to homeowners whose loans Citi owns and currently does not cover the nearly $600 billion in securitized loans owned by investors for which Citi provides loan services. The bank is currently in talks with investors about how to provide assistance to homeowners whose mortgages have been sold as packaged with other loans and sold to investors.
And therein is a central problem with many of the homeownership preservation programs, according to Cecala. Much of the assistance, even that provided by IndyMac, does not cover loans that have been bundled together and sold to investors. Cecala said approximately 80 percent of subprime loans are securitized as are nearly 75 percent of the "no income verification" loans.
"Unless you come with something to deal with those loans and get investors to cooperate, you are not going to find any solutions," he said.
In other words, many of the bank programs cannot actually help homeowners in trouble. According to Cecala, the hope is that with all these plans being launched, perhaps they will start to make a dent in the growing foreclosure crisis in the country.
With reports from ABC News' Zunaira Zaki.