CitiMortgage announced the launch of the Home Rental Program, which will be managed by Carrington Capital Management LLC and Carrington Mortgage Services LLC, a specialist in servicing distressed residential real estate assets. Developed by CitiMortgage and Carrington as a pilot program, the Home Rental Program is designed to provide an alternative to foreclosure and allow eligible borrowers to stay in their homes by entering into a deed-for-lease home agreement and establishing a lease.  

Sanjiv Das, chief executive officer of CitiMortgage, said, “CitiMortgage remains committed to finding solutions that can ease the burdens of distressed homeowners. The Home Rental Program offers eligible borrowers an option to remain in their homes while avoiding the disruption of foreclosure. As a financial institution, managing a program of this nature is not within our area of expertise, so we joined with Carrington, one of the best property management companies in the country, to help make this program work. In addition to helping families by keeping homes occupied, the program assists neighborhood revitalization and stabilization efforts, which are crucial to the nation's economic recovery.”

“We’re looking forward to working on this important initiative with CitiMortgage and our partner, Oaktree Capital Management," said Bruce Rose, founder and chief executive officer of Carrington Holding Company LLC.  "Offering alternatives for borrowers looking to stay in their homes and simultaneously relieving their distress is core to the operating principles of our firm and will help substantially in the overall housing market recovery."

Under the program, the eligible borrower transfers ownership of the property to a vehicle established by Carrington Capital and its joint venture partner, Oaktree Capital Management L.P., acting as investment manager for  certain investment funds. Carrington will assume responsibility for servicing these loans and offer the program to qualified borrowers beginning in August. To implement the program, CitiMortgage has transferred the ownership of loans in its portfolio through the sale of $158 million in mortgages to the Carrington/Oaktree partnership.

The program will be tested in six markets, most of which have been hard hit by the housing crisis, to evaluate its effectiveness: Arizona, California, Texas, Florida, Nevada and Georgia. Carrington will contact homeowners who meet the eligibility requirements. To be eligible, candidates must: 

• Be unable or ineligible to receive an affordable loan modification, but have the resources to make monthly rent payments.

• Have a loan in the pilot portfolio serviced by Carrington

• Occupy the property

• Owe more than their home is worth 

• Be delinquent for 120 days

Eligible candidates are not required to accept the deed-for-lease option. Candidates who agree to a deed-for-lease will establish a lease for the property at a manageable monthly payment. Carrington will work with borrowers to establish an optimal length for each lease. Lease payments will be determined by local market rates but are expected to be lower than the borrower’s current mortgage obligation.