CitiMortgage is selling $158 million of nonperforming loans to a joint venture that will be required to give underwater borrowers an option to rent the property if they cannot qualify for a loan modification.
The CitiMortgage pilot program, done in conjunction with Carrington Capital Management and its joint venture partner Oaktree Capital Management, will be tested in six troubled real estate markets: Arizona, California, Texas, Florida, Nevada and Georgia.
Carrington Capital Management is a servicing specialist and is Fannie Mae’s largest rental manager, according to CMC executive Rick Sharga. (Carrington is buying the loans.)
Under the pilot program, CMC will attempt to modify the loan first, which will often involve principal reduction.
“If the borrower can’t qualify or isn’t interest in a loan modification – we will offer a rental option,” Sharga said.
The pilot deed-for-lease program will target roughly 500 underwater borrowers that have been delinquent for 120 days, according to Sanjiv Das, chief executive of CitiMortgage.
“The program offers eligible borrowers an option to remain in their homes while avoiding the disruption of foreclosure,” Das said.
