Citibank consumers may be able to get help paying their mortgage or with a down payment or closing costs. On Monday, Citigroup announced it will pay $7 billion to settle charges by the government that it misled investors about the quality of its mortgage securities in the years before the financial crisis. Of that $7 billion, $2.5 billion is earmarked for “consumer relief.” Citigroup to pay $7 billion Citigroup will pay $7 billion to resolve a U.S. government probe into its sales of mortgage securities. Lee Hawkins reports. This relief will come in a variety of ways, including loan modification for consumers (a minimum of $820 million will go toward this, and it includes principal forgiveness on underwater mortgages), refinancing at lower interest rates to those currently paying high interest rates (a minimum of $299 million; to get credit towards this, Citi must provide at least 200 basis points of relief to a consumer) and down payment and closing cost financial assistance for some buyers (Citi can earn credit towards the $2.5 billion consumer relief requirement by providing this). Plus, Citigroup will give donations to organizations that help communities with redevelopment (a minimum of $50 million) and affordable rental housing for low-income families in high-cost areas ($180 million), according to the Justice Department. Bartlett Collins Naylor, a financial policy advocate for Public Citizen, says that this settlement will likely impact about one million Citi consumers. The settlement is short on specifics, in terms of who exactly qualifies for assistance, said Keith Gumbinger, vice president of HSH.com, a provider of consumer loan information. Still, if you’re a Citigroup consumer, there are some things you need to know about the aid program. The full details are available in this document (beware: you may need a lawyer to translate this for you) and the simplified version below. Which Citigroup consumers might qualify for aid? Homeowners struggling to make payments are likely to be some of the biggest beneficiaries. Any struggling borrower whose mortgage is serviced by Citi could possibly be eligible, said Paul Leonard, director of the California office of the Center for Responsible Lending. Those who have tried to obtain assistance in the past may have more luck now, as Citi may have “more of a willingness to work with you,” Gumbinger said. The relief that Citi provides will “ensure that a homeowner is no longer underwater and will extinguish second and junior liens,” according to the Department of Justice. Much of the relief provided by Citi will be in areas defined by HUD as having a high number of vacant or distressed properties and foreclosures, according to the Department of Justice. While down payment or closing cost assistance might also be offered, it’s likely that Citi will “look to help troubled existing clients in their portfolio first,” Gumbinger said. Those that do get down payment and closing cost assistance will likely be borrowers in some of the areas hardest hit by the mortgage crisis, those who lost homes to foreclosure and short sale and first-time, low-to-moderate income borrowers, according to the Department of Justice. How will I know if I’ve become eligible for aid? Citi will notify you. Under the settlement agreement, “Citi will engage in broad-ranging outreach—including multilingual outreach—to ensure that eligible homeowners and potential borrowers are aware of the relief that may be available to them,” according to documents from the Department of Justice. Citigroup is currently evaluating its consumers to determine who is eligible for the aid and will let you know if you are one of them, says Mark Costiglio, a spokesperson for the bank. He declined to comment further when asked for more specifics on eligibility. When can I expect to get the aid? The short answer: likely in the next three years. There’s a time window to pay out this money. If Citigroup fails to distribute all the funds by the end of 2018, the company must make a payment to NeighborWorks America, an organization focused on affordable housing and community development, Gumbinger said. There are also incentives for finishing before Oct. 1, 2015, Leonard said. For that reason, there could be a strong push early on to spend some of these funds, he said. And that’s a good thing because for borrowers at risk, “every day that goes by is a missed opportunity,” Leonard said. Source: marketwatch.com