Housing group helping on Citi loans

Bruce Marks says his organization has received requests for help from thousands of homeowners nationwide. (Reuters)

Since Antonio Molino refinanced his two-family in Roxbury with a subprime mortgage in 2003, his monthly payments have almost doubled to $4,900 and nearly crushed him.

But in contrast to the record numbers of subprime borrowers losing their homes in foreclosure, he found relief.

The housing organization Neighborhood Assistance Corp. of America stepped in and is renegotiating his loan with Citi, which agreed to slash his payments nearly in half, he said. He is among the first beneficiaries of an agreement NACA signed last week with the New York banking and investment giant to rewrite mortgages of borrowers who cannot afford their housing payments. NACA's chief executive, Bruce Marks, signed a similar agreement with Countrywide Financial Corp. last fall.

Among Citi's businesses is acting as the loan servicer, which collects payments and performs other administrative tasks on behalf of mortgage holders, which are typically investment pools. The loans were originally made by Ameriquest, Argent, Citi, and other lenders, and resold to investors. (Citi acquired Ameriquest's and Argent's servicing customers in September.)

Marks said NACA has received requests for help from some 3,000 homeowners nationwide whose loans are serviced by Citi.

Citi spokesman Mark Rodgers said yesterday it would evaluate loans "on a case-by-case basis to determine borrower eligibility" for NACA's intervention. A company statement said Citi has "moved aggressively" to help borrowers and is working with local and state governments, regulators, and nonprofits to do so.

Based in Jamaica Plain, NACA seeks to reduce the monthly payments to the point where they are affordable based on borrowers' income. To determine what's affordable, NACA subtracts household expenses such as utilities, groceries, and a $200 cushion from the borrower's after-tax income. The amount of income that remains is what they can afford and drives their new payments under the restructured loan.

The mortgage holders would then have to agree to the new terms, though Marks said his group has given Citi wide latitude to negotiate. During the housing boom, many lenders sold adjustable-rate loans that did not take into account whether borrowers could afford the payments after the interest rate adjusted to higher levels.

"We have refused to accept anything less than a permanent interest-rate reduction for the homeowner," Marks said.

He said the bad loans typically have adjustable interest rates, and all renegotiated loans will carry a fixed rate, typically 5 percent for the remaining life of the loan.

Nulsen Smith, a Boston consultant for Rinet Co., a Boston financial planning firm, said mortgage holders are finding it in their interests to rewrite loan terms with borrowers because they have so many other loans already in default. By agreeing to work with NACA, these mortgage holders ensure they will continue to receive payments, rather than have to foreclose on a property that will be difficult to sell in the current housing slump.

"They're saying, 'We don't want keys. We've got all the keys we need,' " Smith said.

Since October, Countrywide has successfully restructured about 750 mortgages with his organization, Marks said; another 1,550 delinquent Countrywide mortgages are in the pipeline. Countrywide agreed to permanently reduce customers' interest rates to 5 percent, though some are lower. Borrowers' payments are going down between $500 and $2,000 a month.

Molino, a disc jockey for Spanish radio station 1410-AM, said it was "hell" scraping together the money each month to make the higher payments on his adjustable loan. In January, he received an initial notice that his lender was starting foreclosure proceedings. Now he hopes to sign a new loan, one he can afford, sometime this month. He said his new payment will be about $2,500.

"It's a great thing happening," he said.

Kimberly Blanton can be reached at blanton@globe.com.