Released: October 04, 2007

Mortgages for those who lack credit history

Source: Dina ElBoghdady, Washington Post (Free Registration)

CitiMortgage plans to announce today that it has set aside $200 million for mortgages to Washington area residents who have limited credit histories and therefore often end up with high-cost or risky home loans.

CitiMortgage, a division of Citigroup, plans to fund the loans as part of a test project that may be extended nationwide next year. Fannie Mae and State Farm Insurance each have agreed to buy $100 million worth of those mortgages.

The “thin-file” borrowers targeted by this program tend to be immigrants and others who shy away from using credit cards or taking out loans, making it difficult for lenders to assess their track record for repaying debt. Without a record, these people are usually rejected for mortgages they could actually afford or they take out pricey subprime loans, the kind that have been closely linked to high foreclosure rates nationwide.

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