Citibank will make available an additional $1 billion in loans to refinance mortgages for qualified homeowners, using capital it obtained through the Troubled Asset Relief Program (TARP), the bank has announced.
The new loans are part of $8.25 billion in TARP-supported lending the bank announced today, including a $5 billion "municipal lending program" hospitals to fund projects that will help create jobs and spur economic growth. The bank also announced it will lend $250 million in TARP fund s for auto loans as well.
The announcement comes on the heels of news that the government's "stress tests" revealed that Citibank will need an additional $5.5 billion in capital to be assured of surviving the current economic downturn.
Will lend out nearly all TARP money
Citibank says the new initiatives bring to $44.75 billion the amount of capital it has provided to U.S. consumers, businesses and communities under the TARP, accounting for nearly all the $45 billion the bank received under the program. The bank says it has extended a total of more than $200 billion in credit commitments in the U.S. since October 2008.
The information was released in the bank's quarterly TARP progress report. Citibank received the TARP funding after the government agreed to help it absorb losses on $300 billion in troubled assets, whose actual value is yet to be determined.
Says 80,000 homeowners helped this year
The bank says it has helped 80,000 homeowners avoid foreclosure in the first quarter of 2009, with loan modifications and refinancing outnumbering foreclosures by 10 to 1. It says it has helped 520,000 homeowners avoid potential foreclosures since the housing market began to collapse in 2007. With unemployment rising, the bank says it is also taking additional steps to lower mortgage payments for out-of-work homeowners.
It is not clear whether the $1 billion in refinacings will be directed toward financially pressured homeowners seeking relief through government programs, or if it will be primarily used to refinance mortgages for financially sound homeowners seeking to take advantgage of low interest rates.
$5 billion to support capital projects
The $5 billion municipal lending program will provide municipal clients such as state and local governments, municipal agencies, universities and non-profit hospitals, with tax-exempt funding for three years. The funding is intended to help finance the construction of schools, airports, non-profit hospitals and other infrastructure and capital projects.
"Citi's municipal lending program is designed to help communities around the country pursue infrastructure development and other projects at a time when the difficult credit environment has limited access to other funding sources," Citi Chief Executive Officer Vikram Pandit said. "Investments in projects like schools and hospitals help create jobs and will be an integral part of our country's economic recovery."