Citigroup Faces Pressure to Help Troubled Borrowers

Fallout mounts from $45B mortgage portfolio
By Nick McMaster,  Newser Staff
Posted Nov 26, 2007 4:55 PM CST
Pedestrians pass a Citibank branch office Monday. (AP Photo/M. Spencer Greeen)   (Associated Press)
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(Newser) – The subprime collapse has Citigroup beset on two sides: Besides dealing with a $45 billion portfolio of 280,000 subprime mortgages it acquired in September, Citi is facing pressure from influential consumer advocacy groups to provide relief to troubled borrowers, the Journal reports. Activists are calling for the lender to fix adjustable-rate mortgages at low initial “teaser” interest rates.

The advocacy groups argue that many subprime borrowers were coerced into loans they couldn’t really afford and deserve modification and help to prevent foreclosure. Although subprime lenders are generally loath to modify mortgage interest rates, a Citi aid program is now offering borrowers 7-year fixed-interest periods—an offer that could spell further losses for the conglomerate.