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• Citi Postpones Foreclosures for 30 Days
• Fannie Requires Servicers to Offer Alternative for Failed HAMP Modifications
• One Year Later, HAMP Servicers Modify 170,000 Mortgages
• Foreclosure Activity Outpaces Mods in October: Hope Now

CitiMortgage, the servicing arm of Citigroup (C: 4.12 +0.73%), will pilot a new Foreclosure Alternatives Program that allows distressed borrowers to stay in their homes an additional six months in exchange for the deed.

Beginning Feb. 12, 2010, the program will launch in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Citi expects 1,000 families to participate in the program. A spokesperson for Citi told HousingWire that there is no end date set.

Citi will also allocate a minimum $1,000 to borrowers to assist with relocation. As part of the agreement, the borrower must maintain the property and attend bi-monthly meetings with relocation professionals. Citi will evaluate the borrower for a permanent mortgage modification or a short sale before entering the borrower into the Foreclosure Alternatives Program.

In order to enter the program, the borrower must hold first mortgages with a clear title owned by CitiMortgage, occupy the property and are at least 90 days delinquent on the mortgage.

The US Treasury Department will provide short sale and deed-in-lieu options to borrowers through the Home Affordable Foreclosure Alternatives (HAFA) program when it launches on April 5, 2010. Through the program, the Treasury will allocate incentives to servicers and investors to pursue a short sale or deed-in-lieu of foreclosure.

A Treasury official speaking at the American Securitization Forum (ASF) admitted that modifications under the Home Affordable Modification Program (HAMP) are not for everyone. The Treasury launched HAMP in March 2009 to give capped incentives to servicers for the modification of loans on the verge of foreclosure. Though the Treasury and the Obama administration hold aim at modifying 3-to-4m loans through the program, servicers provided 66,000 permanent modifications through December.

“Short sales, deeds in lieu are other ways to prevent foreclosures to help achieve [housing] stability,” said Seth Wheeler, senior advisor to the Treasury. “Modifications are only for a certain subset of distressed homeowners.”

Under HAMP, CitiMortgage provided 6,968 permanent modifications through December. CitiMortgage activated trial modifications on 47% of the 241,981 HAMP-eligible loans in its portfolio, more than any other servicer in the program, according to the latest Treasury report.

Write to Jon Prior.