It’s kind of the oldest adage in the mortgage servicing playbook: job losses mean borrower defaults. And with unemployment rising, it’s pretty clear that that old adage is back at the forefront of the business, yet again. Citigroup Inc. (C) announced Tuesday Morning what it’s calling its Homeowner Unemployment Assist Program, a new initiative that the company said will look to help those recently unemployed stay in their homes by paying a reduced monthly mortgage payment for three months. “Unemployment is a major concern facing the American economy right now, and it especially worries mortgage holders,” said Sanjiv Das, CEO of CitiMortgage. “Our Homeowner Unemployment Assist program is intended to serve as a bridge toward a longer-term solution, helping homeowners stay in their homes and in their communities while they get their feet back on the ground.” Beginning March 3, CitiMortgage customers meeting certain criteria who have recently lost their jobs will be eligible to participate in the new assistance program, the company said in a press statement Tuesday morning. The bank will actually drop the required monthly payments for the “majority of qualifying customers”  to an average of $500 for three months — $500 is below the cost of the nationwide average rent for a one-bedroom residence. Citi said it will remain in contact with customers during the three-month period in an “effort to sustain an ongoing dialogue while customers work toward long-term employment solutions.” If the customer is not employed within the three month window, Citi will work with customers on a case-by-case basis, but did not specify what would happen beyond that three month window should a borrower remain unemployed an unable to afford a full payment on their mortgage. The bank, which has received dramatic assistance from the government to remain afloat, said it anticipates that thousands of homeowners may be eligible to participate in the program over the next two years, if they choose to do so. And following the evaluation of initial results, Citi said it will also consider expanding the program to include borrowers at earlier stages of delinquency or who are current on their loans — you know, to maybe sidestep the whole moral hazard thing. As it stands now, however, in order to qualify a borrower must have involuntarily lost their job, be at least 60 days delinquent on their mortgage, have sufficient funds to make reduced payments and not be eligible to participate in the FDIC’s long-term modification program, among a few other requirements. “Citi’s foreclosure prevention efforts helped approximately four out of five borrowers with mortgages serviced by Citi stay in their homes,” Citi touted in a statement. “This new initiative is designed to help those in the remaining twenty percent who may have no other options available because they have lost their jobs.” Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

More: