agreed to participate in the Second Lien Modification Program (2MP) within the administration’s Home Affordable Modification Program (HAMP).
2MP will call for modifications that reduce monthly payments on qualifying home equity loans and lines of credit under certain conditions, including the completion of a HAMP modification of the first mortgage.
"It is our priority and commitment at Citi to help homeowners in need," said CEO Vikram Pandit in a press statement today
. "The 2MP program will further improve the affordability on mortgages and help families facing financial distress stay in their homes.”
Citi is among the first servicers to sign on to the program, following days after JPMorgan Chase (JPM) announced it would participate
. Last week, Wells Fargo (WFC) signed on to participate in 2MP
after Bank of America (BAC) became the first to sign on in January
Since the program was first announced in April 2009
, the risk that “silent” second liens pose to first lien bond holders in residential mortgage-backed securities (RMBS) has only grown louder
. Investor fears culminated this month in a letter from House Financial Services Committee chairman Barney Frank
(D-Mass.) urging the top four lenders to pursue “immediate steps to write down second mortgages.”
Write to Diana Golobay
Disclosure: The author holds no relevant investment positions.