Anyone Still Have An Interest Only Loan With Citi?

Aspie Mom

LoanSafe Member
Jun 14, 2012
40
5
8
Michigan
I haven't posted on here for years as I have chosen to just ride out the market ups and downs and see what happens.

Turns out my 80/20 Variable Interest Only loan is set to flip to 2 loans of P&I amortized over 20 years next year.

When this occurs I won't be able to afford the payment and will have some difficult choices to make. My house is also about $30k underwater. I have tried since 2008 to get a modification. I didn't want a principle reduction, interest rate reduction or anything of that nature. I simply wanted a 30 year FIXED rate loan that I could afford and count on to be stable month after month.

Neither one of my loans are Freddie or Frannie so all the government help programs aren't available to me.

In 2005 when I took out this crazy loan it seemed to be a win-win. Rising real estate, rising salaries etc......

So here I am 9 years in. 30k underwater. Older home in desperate need of major repairs. Salary about same. Single parent losing part of my child support because one of my children is going to be 18 while I still have a special needs child of 13 with me.

Anyone else still dealing with this type of situation?
 

Moe Bedard

Call 1-800-779-4547
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Hello Aspie Mom,

Many of you will have to start the loan modification process either now or later. Either while you are current or late on payments.

There have not been a whole lot of members who have seen their Interest Only loans adjust, but there have been a few and some who are concerned about the coming resets of their loans. In fact, I was just discussing this very thing with a member earlier in another thread who said, "efied to I/O in June 2005. Citi bought my loan. My I/O runs out June 2015 so the payment goes up by about $1100 a month. I can probably swing it, but if the 6 month Libor starts ticking up."

I then pulled up some recent information on these, and it looks like you will have a lot of company.

Here some good information on both HELOC and IO loans from some older articles that give us numbers and they do not look good. They seem to increase this year and more and more as the years pass into 2018.

Here is an LA Times article from 2013. The estimate is that $30 billion in home equity lines will reset next year, $53 billion in 2015, and then ultimately soaring to $111 billion in 2018.

From the LA Times:

Some mortgage and credit experts worry that billions of dollars of home equity credit lines that were extended a decade ago during the housing boom could be heading for big trouble soon, creating a new wave of defaults for banks and homeowners.

That’s because these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory “resets” requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required.

But the difference between the interest-only and reset payments on these credit lines can be substantial — $500 to $600 or more per month in some cases.

According to federal financial regulators, about $30 billion in home equity lines dating to 2004 are due for resets next year, $53 billion the following year and a staggering $111 billion in 2018. Amy Crews Cutts, chief economist for Equifax, one of the three national credit bureaus, calls this a looming “wave of disaster” because large numbers of borrowers will be unable to handle the higher payments. This will force banks to either foreclose, refinance the borrower or modify their loans.

Financial regulators, including the comptroller of the currency, are aware of the coming bulge in high-risk resets and have been urging the biggest banks to set aside extra reserves for possible losses. Last month, Citigroup said it was increasing reserves on its nearly $20 billion in home equity lines and acknowledged that the reset payment shocks for borrowers could be a major challenge.​

LINK: http://www.latimes.com/business/realestate/la-fi-harney-20131110-story.html#axzz2kNgJik5m

Here is a news article from 2009 by the NY Times which shows data on the I/O loans from First American CoreLogic etc. Here are the key points:

shows there are 2.8 million active interest-only home loans worth a combined total of $908 billion.

The interest-only periods, which put off the principal payments for five, seven or 10 years, are now beginning to expire. In the next 12 months, $71 billion of interest-only loans will reset. The year after, another $100 billion will reset. After mid-2011, another $400 billion will reset.

They were especially popular in Florida, Nevada and above all California. In 2004, nearly half of all buyers in the state got one.

said Mr. Goldman, a lecturer in real estate finance at San Diego State. “If you purchased your home with an interest-only loan between 2003 and 2006, you’re cooked.”

Nationally about 18 percent of prime interest-only loans are at least 60 days delinquent. In California, the level is even higher: 21 percent, a rate exceeded only in the other bubble states of Florida and Nevada.​

LINK: http://www.nytimes.com/2009/09/09/business/09loans.html?pagewanted=all&_r=0
 

Aspie Mom

LoanSafe Member
Jun 14, 2012
40
5
8
Michigan
Thank you for such a detailed answer.

It's actually comforting, on some level, knowing that there are others out there with the same circumstances and worries. Strength in numbers I suppose.

It's caused such anxiety and misery over the years to the point that I will never purchase a home again.

No one has been willing to work pro actively since I technically can 'afford' my payment right now. It doesn't seem to matter that at one point that will no longer be the case. My intention has always been to obtain a fair and affordable loan for the security and well being of my family. We are coming way too close to that reset point that seemed so far away when I signed this note.

Thanks again for such a great response.
 
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Aspie Mom

LoanSafe Member
Jun 14, 2012
40
5
8
Michigan
Quick follow up question.....

The articles mention HELOC being an issue. What about IO loans that were used as the 1st and /or 2nd to purchase the house. Essentially I funded 100% plus closing costs on an IO loan.
 
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Moe Bedard

Call 1-800-779-4547
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Aug 10, 2007
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You are most welcome.

I know this is very stressful and that is one of the very reasons I created this forum. Not only to learn, but also to help let you all vent, and get all this stress off your chest.

The 2nd article references in 10 year IO loans, but with old stats. I do know that many loans made over the last 10 years were interest only and this trend that has continued up until this very day.

Here is a year old chart that shows delinquencies on ARMs vs fixed in 2013. I assume it is the same now or more.



I know this doesn't help you much now, but as you said, strength in numbers and maybe the mortgage servicers will offer more help to people like you who will be in the rising tide of homeowners with IO loans that will need help.

Thanks for sharing your story with the community. Each one of you help countless others who will follow in your foot steps.

Peace be with you!
 
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msmonica

LoanSafe Member
Jan 24, 2009
10
0
1
I was just curious if Aspie Mom has an update. I am in the exact same situation and do not know what to do as their is no help for those of us who have IO loans expiring.
 

Aspie Mom

LoanSafe Member
Jun 14, 2012
40
5
8
Michigan
Ms Monica,

I do not have an update, unfortunately. I have been contacted by the holder of my 2nd (B of A) notifying me that my IO is set to expire in a year and to contact them then if I have issues.
I actually was out of my house for 3 months and just returned this past weekend. I had posted on here in the summer that I had to put a new roof on the house and was not pleased about spending the money. Well it turns out that the roofers were negligent during the installation and my house required repairs that forced my family out for 3 months. Just another insult in a long list of housing disasters.

Hopefully people, like us, will get some help soon before time runs out for us.
 

troubleinriverside

LoanSafe Member
Nov 30, 2008
773
18
18
I am the one in the same situation. My 10 yr interest only expires in May. I can probably swing the payment, it will be tight. But what would really be great is if I could get a Mod into a 40 year fixed. I used the free government website where you put in your numbers, and it tells you what you qualify for, and it said a 40 year fixed at 4.5% boy I would take that in a hot second if Citi would offer it. I haven't approached them yet , but I'll see when my times up.
 

Aspie Mom

LoanSafe Member
Jun 14, 2012
40
5
8
Michigan
I am the one in the same situation. My 10 yr interest only expires in May. I can probably swing the payment, it will be tight. But what would really be great is if I could get a Mod into a 40 year fixed. I used the free government website where you put in your numbers, and it tells you what you qualify for, and it said a 40 year fixed at 4.5% boy I would take that in a hot second if Citi would offer it. I haven't approached them yet , but I'll see when my times up.
My time is up in December. I'm sure hoping that there are options available when that time comes. Please keep me posted on your situation as I will be interested to see how you fare.......maybe give me some hope.
 

MarkSimms

LoanSafe Member
Sep 22, 2014
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easypaydayapproval.com
Maybe you tried this already, but do you know of someone, a relative, etc., that needs housing and can rent a room from you? This will help you get the extra cash to help you with your mortgage payment. Many people are feeling the pinch and maybe your house has an extra room that you could rent out.
 

LostCiti

LoanSafe Member
Jun 24, 2012
22
0
1
Hi there good people!
I am in the same boat! I have the 1st mortgage on I/O for 10 yrs which will be done and reset in August.
The 2nd mortgage also w/ CITI I stopped paying 2yrs ago .
I've been trying to get assistance on a modification since my layoff on 2009 and nothing!
Citi just keeps telling me the investor wants his interest up front and after 10 yrs my payment will go up approximately $1200 more !
Come to find out that they are they're own investor under a subsidiary name ( CMALT ).
The whole thing is a nightmare.....just evil bankers of the world.
This waiting game is exhausting and stressful.
To add to misery...we just found termites are invading our home :(
What to do ?
I'm just too stressed and tired.

LostCiti
 

msmonica

LoanSafe Member
Jan 24, 2009
10
0
1
I have good news to share. After five attempts for a loan modification, Citi has finally approved my 1st to be modified under HAMP. My interest rate and interest-only period was about to expire in May of this year and I am about to dive into the trial-payment period to firm up my fixed rate for the duration of the loan. The payment is higher than I am currently paying (approx. $500 higher), however it includes principal, taxes, escrow, etc. so I expected that. . I am being told my 2nd will be reviewed under the same program to see if there is anything else they can do, not sure if anyone has any experience with that part of it.
 

hoodoo

LoanSafe Member
Mar 1, 2010
16
0
1
It's been awhile since I've posted here. I have a mortgage with Citi which will reach the end of the Interest Only period in April 2017. You can see that I posted 6 years ago about my failed attempt to qualify for HAMP and my credit being ruined at the time. After that I was successful in getting my credit restored and also in getting loan modification from Citi to reduce the interest rate to 4%. The original terms of the Interest Only loan were not changed, only the interest rate was modified.

So now, I am faced with the end of the Interest Only period in April 2017. My monthly payment will go from $2,000 (excluding taxes and insurance) to $3,600 as it's financed over 20 years as a fixed loan at 4%. I cannot afford a $1,600 increase with my current debt load. What are my options? Should I call Citi and ask for a lower interest rate or a longer term for the loan (or both)?

My home value is underwater, so I think it would be in Citibank's best interest to work with me as they would not recoup their money if I walk away from the home. The loan amount is $598,000.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,828
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1,000
48
Southern California
www.loansafe.org
Hello Hoodoo,

There have been countless LoanSafe members who have had the exact same thing happen to them and many were able to obtain a 2nd and even a 3rd loan modification. Unfortunately, some members were not able to get a 2nd loan mod.

All you can do is reapply to see if they will give you a 2nd loan modification. As you well know, its is pretty tough to get them to assist you with your mortgage when you are current and there are not current signs of stress even though it is obvious that come April, you will be in trouble. Hence, this will be your biggest obstacle in trying to get help now.

With that said, you can definitely try for a loan mod now, but most likely you will have to wait until April or even after you are late on your mortgage after the interest rate reset.
 

hoodoo

LoanSafe Member
Mar 1, 2010
16
0
1
Thank you, Moe. I'm trying to decide whether to approach Citibank now or wait. We have the $598K first with them, plus a 2nd and HELOC with a credit union ($75K total for both of these). The value of my home is probably $450K or less (Zillow says $461K), so I don't think refinancing is possible. I have a good stable job, but always negative income every month after paying the bills.

In April the interest rate on the 1st mortgage will stay at 4% but will change from interest only to a 20 year amortized loan. Any help with figuring out the best approach or angles of attack to solve this are appreciated!