Military homeowners have taken a beating the last few months at the hands of some of the country's largest mortgage lenders.
They're just now finally starting to catch a break.
Citigroup announced this week that it would cut interest rates and waive late fees and other past due amounts for service members who are wounded, injured or otherwise disabled. The mortgage relief program is part of Citi's Homeowner Assistance Program.
The initiative will cut interest rates by 2.5 percent on existing mortgages for two years for qualified homeowners. Surviving spouses are also eligible to participate. Applicants don't need to document any financial hardship. But they will be required to provide discharge documents and correspondence from the Department of Veterans Affairs.
Veterans will only be considered for the two-year rate reduction if they are deemed ineligible for a permanent mortgage modification through CitiMortgage.
"We recognize that wounded or disabled veterans may be having financial difficulties in this challenging economic environment, and they warrant our heightened consideration," CitiMortgage CEO Sanjiv Das said in a news release.
To be eligible, the service member's loan must be a first mortgage owned by CitiMortgage. Homeowners with government-backed loans (FHA, VA or USDA) or loans under the Servicemembers Civil Relief Act are not eligible to participate.
The new mortgage relief program from Citi comes after lending giant JP Morgan Chase recently agreed to pay $56 million to settle claims that it repeatedly overcharged military families on their mortgages and improperly foreclosed on nearly a dozen service members.
Mortgage companies nationwide are under pressure to scrutinize military mortgage accounts. A recent Government Accountability Office report concluded that two of the country's largest mortgage banks improperly foreclosed on the homes of nearly 50 active duty service members.
Government regulators discovered the inappropriate foreclosures during an analysis of about 2,800 loans that went into foreclosure in 2010. Millions of foreclosures from the past few years have yet to be examined for irregularities. The GAO report didn't identify the two mortgage companies.
Active duty military members are supposed to be insulated against foreclosure and other civil and financial obligations through the Servicemembers Civil Relief Act (SCRA).
Chris Birk is director of communications for the VA Mortgage Center, which specializes in VA loans for veterans and active duty service members.