CitiMortgage said yesterday that it launched a home rental program that will be managed by Carrington Capital Management and Carrington Mortgage Services.
Developed as a pilot by CitiMortgage and Carrington, the home rental program was meant to offer an alternative to foreclosure and allow eligible borrowers to stay in their homes by entering into a deed-for-lease home agreement and establishing a lease.
Under the program, the eligible borrower transfers property ownership to a vehicle established by Carrington Capital and its joint venture partner Oaktree Capital Management, acting as investment manager for certain investment funds.
The firm will assume responsibility for servicing these loans and offer the program to qualified borrowers starting in August. To implement the program, CitiMortgage has moved the ownership of loans in its portfolio via the sale of $158 million in mortgages to the Carrington and Oaktree partnership.
To evaluate its effectiveness, the program will be tested in six markets hard hit by the housing crisis including Arizona, California, Texas, Florida, Nevada and Georgia.
Carrington will contact homeowners who meet the eligibility requirements. These include homeowners who cannot receive an affordable loan modification, but can make monthly rent payments; have a loan in the Carrington-serviced pilot portfolio; who live in the property; whose homes are underwater; and who have been delinquent for 120 days.
However, eligible candidates are not required to accept the deed-for-lease option. Those who agree to this alternative will establish a lease for the property at a manageable monthly payment.
Carrington will work with borrowers to establish the best length for each lease. The payments of which will based on local market rates, but should be less than the homeowner’s existing mortgage obligation.
“CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners," a release from the company said.
Aside from helping families by keeping homes occupied, the program helps the revitalization and stabilization of neighborhood, which are crucial to the nation's economic recovery.
“We’re looking forward to working on this important initiative with CitiMortgage and our partner, Oaktree Capital Management," said Bruce Rose, founder and CEO of Carrington Holding Co. "Offering alternatives for borrowers looking to stay in their homes and simultaneously relieving their distress is core to the operating principles of our firm and will help substantially in the overall housing market recovery."