Citigroup Pretends to Help Foreclosed Homeowners

’ve spent the last couple years studying the real estate market and the housing market collapse and the one thing I learned is that the banks and the people running them are basically the worst people on earth.

President Andrew Jackson said it best in 1834 when he called bankers “A den of vipers and thieves.” In fact, I’m pretty sure that a required qualification to sit on the board of a major bank is willingness to steal from one’s own mother.

The banks exhibited their unencumbered greed under the auspices of false charity recently when CitiGroup rolled out their “Home Rental Program.”

Citi’s plan would supposedly rescue 500 homes that were at risk of foreclosure and allow the owners to rent the homes instead of being foreclosed and thrown out into the street. This would be a great deal if that was what they were doing. But it’s not.

The big problem with Citigroup’s supposedly generous “Home Rental Program” is that they don’t actually own the homes they’re offering these deals for.


What they’re really doing is selling the 500 mortgages to investment groups Carrington Capital Management and Oaktree Capital Management. Then those groups will give the homeowners the “opportunity” to give their home away in exchange for the chance to rent it back from them.

Fortune Magazine reports:

“As part of the deal, Citi sold $158 million worth of mortgages to an investor group of Carrington Capital Management and Oaktree Capital Management. In fact, this deal isn't all that different from ones banks have been striking with investors for some time now.

"As in other deals, Citi has no remaining stake in the homes, or really much say in what happens to the mortgages or homeowners.”

This is no different than what Citigroup and the other big banks were doing during the mortgage boom and bust of the 2000s. They’re selling off their mortgages as mortgage-backed securities to investors and promising that even though they gave these loans to people who probably can’t pay them back, the investors will make money.

This was the basis of the subprime mortgage market-banks would find people they knew couldn’t pay back the loans (usually minorities) to give mortgages to and then sell those mortgages to investors pretending that they were AAA-rated, and wash their hands clean of the whole matter. If the homeowner needed help, they had no one to turn to because the bank they got the mortgage from no longer had anything to gain by helping them.

This so-called “Home Rental Program” is just that with an added wrinkle: the investors know that the people holding the mortgages cannot pay them. With that in mind, Carrington and Oaktree’s rental agreements have no guaranteed rental term length, meaning they can simply evict the former homeowners whenever they feel like it.

So, Citigroup gets to rid themselves of a bunch of bad mortgages by selling them for $158 million to these two investment companies and gets some good PR by “saving” these struggling homeowners from foreclosure. Then, once no one is looking, Carrington and Oaktree pull the lease, kick the tenants out and flip the house.

This is a great deal for everyone-except for the homeowners who were trying to keep their house. My guess is that these mortgages are all held in areas that are about to be gentrified and the investors want to hold until the market turns and everyone has forgotten about this story.

Then they can bulldoze the homes and turn them into condos. But that’s just a guess.

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