Thank you. But I suppose you won’t be willing to offer me a better loan. I can’t believe Citibank is planning on modifying $20billion in home loans..Loans that represent irresponsible borrowing and irresponsible lending, when in fact the only people that are getting hurt are the ones who have been responsible. I would love to have a 4.25% 30 fixed loan, like so many of your irresponsible borrowers will be receiving, despite being a responsible borrow who has never missed a payment. I guess though in order for me to qualify for some of these loan rewrites I would have to intentionally default on my mortgage and all of my citibank credit cards before Citibank would even consider rewriting my mortgage. Unbelievable.
— On Mon, 11/10/08, YYYYYYY wrote:
> From: YYYYYYY
> Subject: Citi Mortgage!
> To: XXXXXXX
> Dear XXXXXXX,
>
> Thank you for visiting the Citi Mortage web site. We would
> like to assist you with any questions that you may have.
> Please call:
>
> *1-800-667-8424 and follow the prompts for your inquiry,
> any one of our Mortgage Consultants will be more then happy
> to assist you.
>
> Thank you,
> YYYYYYYYYY
>
>
> YYYYYYYYYY
> Sales Assistant
> Consumer Direct Lending
> YYYYYYYYYY
> HYYYYYYYYYY
[/quote]
That was after I sent this….
[quote]
10/31/2008
Dear Mr YYYYYYYY,
Thank you for your response to my inquiry concerning a Refinance Loan.
Due to the unprecedented events surrounding the global financial markets, I am writing to express my sympathy for fine institutions, such as Citibank, which are struggling to meet ends meet.
Who would have predicted that both sub-prime and ALT-A borrowers would not be capable of paying back 100% financed mortgages, option-arm mortgages, or 1st, 2nd, Heloced loans taken out on the same property?
Who would have had the insight 4 years ago the home values in the United States were overly inflated, and appreciation of home prices in the United States would not continue indefinitely?
As you have brought to my attention, through numerous press releases, disappointing earnings announcements, and your participation in Congressional testimonies begging the Federal Reserve for additional funds, I understand the tremendous financial strain you are going though to make end’s meet.
*Citibank is in the mist of dealing with a very low quality loan portfolio, which is considerably draining Citibank’s assets.
*The unprecedented amount credit card defaults and late payments and personal bankruptcy filings is adding considerably more pressure to your profitability (or lack thereof) and affecting your solvency.
* This problem appears it will only get worse, as the economy heads into a recession… where countless Americans, who have already lost millions in their 401k retirement net worth, begin losing their jobs. Getting “junk” borrowers (who had difficulty paying loans in a good economic climate) to pay for loans during difficult economic times will be nearly impossible.
*Obtaining new high quality/credit worthy borrowers (such as myself), from which you need to turnaround to profitability and/or maintain solvency, is becoming increasingly more difficult.. Simply put, “high quality” borrowers are sitting on the sideline, postponing all unnecessary home/auto/discretionary purchases…These prudent people see the economic storm over the next decade, and realize that there is no hurry to make unnecessary purchases right now.
I understand the tremendous pressure Citibank is undergoing to meet ends meet… And I want to help you out, so you are not a “victim” of this unprecedented financial events that have claimed the existence of other fine institutions (including Washingtion Mutual, Indy Mac,etc.)
I represent the few select high quality, top tier, “responsible” borrowers that Citibank needs on your loan portfolio to shore up your business and maintain solvency.
Unlike most of your current loan portfolio borrower(s) (whom I’ll collectively refer to as “junk borrowers”), I am well capitalized and fiscally conservative (I don’t spend more than I make).
I have no outstanding unsecured (credit card) debt. All my vehicles are purchased in full. And despite having an outstanding 30 year fixed loan on a primary home I purchased in 2004, I have more than sufficient funds to pay off the outstanding balance of that loan from Bank of America.
You need people like me in your loan portfolio, so your overall portfolio looks “decent”. You need “quality borrowers” like me to offset additional losses you will most definitely incur from your “junk borrowers”, as the health of the U.S. economy will steadily deteriorate over the next decade.
This is where we can mutually benefit each other… As it currently stands, I have no motivation to “refinance” my 30 year fixed loan through traditional means that while yield an existing market rate for the 30 year fixed loan. My refinanced loan interest rate would be considerably higher than my current 30year fixed loan: 5.5%. Furthermore, as I previously stated, I have no need to refinance. Unlike most of your “junk borrowers”, I can actually make the loan payments or pay off the outstanding loan balance completely. Frankly, I am pretty happy to remain a Bank of America “quality” borrower, as they have thrown in ample perks to keep my business.
However, i would particularly be interested if Citibank would offer a 4.5% or lower 30 year fixed rate loan with no pre-payment penalty on my outstanding mortgage balance. Obviously, this would benefit me, since over the life of the loan, I would be able to save more, and invest more, earn more, and ultimately, borrow more from Citibank. It also mutually benefits Citibank, as having me as one of your “quality borrowers”, it will strengthen your loan portfolio, both in the short term, and in the long term…You can count on my ability pay you for the money I borrow, offsetting some of the losses you are expected to incur from your existing “junk” borrowers with with default regardless of whether you modify their loans or not.
I understand you might be hesitant with such an unprecedented arrangement.
As outrageous as my proposition may appear to, it’s nearly not as absurd as modifying loans for “junk borrowers” and expecting them to be solvent over the next few years and have the ability to actually pay you as the U.S. economic climate worsens. Afterall, there is a fundamental reason why they are “junk borrowers” and why they didn’t qualify for conventional loans to begin with! The worst mistake anyone could make is to repeat a solution that doesn’t work: lending to unqualified, risky borrowers that have no financial means to pay back the loan.
Some key differences between your “junk borrowers” and me are:
1) Currently, my outstanding loan to assessed value ratio is approximately 60%, and the property is in Carmel Valley (San Diego, CA 92130), versus heavily depreciated areas such as Temecula, Murrieta, Riverside, Modesto, Sacramento,etc.
2) There are no second or third or HELOCs on this property.
3) My annual household income is $XXX,000
4) My outstanding loan balance is payable in full from assets in short term cash equivalent instruments.
My ability to meet my financial obligation to Citibank is exponentially greater than any “junk” borrowers you are planning to extend loan modifications to. You may be tempted to make a loan modification on one of your existing “junk” borrowers, but consider the following. If a “junk” borrower was already having financial difficultly in meeting existing financial obligations when the U.S. economy was good, how are “junk” borrowers going to be meet their obligations to Citibank when confronted with additional financial strains now occuring (401k retirement account dessimation, unemployment, etc)? Why would you want to throw additional good money provided by the Federal Reserve at “junk” borrowers only to have to revisit the same problem again 1-2 year later, when the same “poor-quality” borrower will ask for your assistance again? Isn’t it much more intuitive to throw the same good money provided by the Federal Reserve to “high quality borrowers” like me, so you can shore up your loan portfolio and balance sheet? Wouldn’t it make more sense to shore up your loan portfolio, by grabbing quality borrowers from your competitors while you still can?
I’m glad you share with me the most prudent choice of action! As you can see, my proposed arrangement between Citibank and I is a “win-win” situation for both of us. I hope you can see the superiority of my proposed arrangement between us.
Please consider my proposal. While I am not in a hurry for your decision, I must inform you that I am also working with your peer institutions, and I don’t expect such a good “win-win” deal to last.
