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What is the Dual Collateral Mortgage Program? Our Dual Collateral Mortgage program allows clients to finance up to 100% of the value of a home without liquidating investment assets. Mortgages obtained under this program feature attractive rates and are secured by collateral in the form of both real property or cooperative shares, and marketable securities held in your Private Bank account. ^ back to top All our standard mortgage products are available with amortizations of up to 30 years. This includes the 15- and 30-year fixed rate products, our line of hybrid loans including the 3/1, 5/1, 7/1, 10/1, 6 month and 1 month LIBOR and all our short-term Adjustable Rate Mortgages. Your Mortgage Specialist can help you select a product based on the time you expect to hold the property, your view of interest rates and other factors important to you. ^ back to top In today's markets, many investors have substantial gains in their securities portfolios. They may wish to continue to hold these investments for future appreciation or to defer the payment of capital gains taxes. The Dual Collateral Mortgage may also allow you to maximize your home mortgage interest rate deduction. Citigroup does not provide tax or legal advice. Consult your tax advisor to assess how this program will affect your unique situation. ^ back to top The Gap amount is the difference between your loan amount and the amount we would have lent had the mortgage been secured only by your home. This is the amount that must be made up by the loanable value of your other collateral. Your Mortgage Specialist will calculate the Gap and Initial Gap Requirement (generally 10% higher) for your individual transaction. ^ back to top The securities portion of the Dual Collateral Mortgage Program works just as other securities-based loans. If the value of your securities falls, the Bank has the right to demand that you deposit additional cash or securities. If you cannot, the Bank has the right to sell any of your securities at any time to protect its secured position. To help avoid a call we require an additional cushion up front (generally 10% higher). We refer to this slightly higher Gap amount required at closing as the Initial Gap Requirement. After closing, we will require the loanable value of your securities to equal or exceed the Gap amount. ^ back to top Citigroup will discount the market value of your securities based on
our current loanable value guidelines. The discounted, or loanable value,
of your securities must equal or exceed the Initial Gap Requirement when
your mortgage closes, and must equal or exceed the GAP amount for the
life of the loan. ^ back to top Your securities will be held in an account at Citi Private Bank. This account will be pledged to Citigroup to secure the mortgage. Your Private Banker can provide the details of your account options and help you select the account that best suits your needs. ^ back to top You may if your holdings include sufficient eligible securities and there are no other credit lines, loans or margin balances charged against the account and provided it is not restricted for any reason. Pledged securities may not be held in a margin account, retirement account, or any account with check-writing privileges. Are there additional fees involved? There are no additional fees required for the Dual Collateral Mortgage over and above the standard mortgage fees, taxes, attorney's fee, title insurance costs, etc. We will, however, require you to pay our then current standard account or maintenance fees for the pledged collateral account. Your Private Banker can provide fee information for each eligible account type, along with the documents needed to open a new account, if needed. ^ back to top As long as the securities in the account have sufficient value to secure the Gap amount, are of acceptable quality and you are not in default of any loan or account agreement, you may trade in the account. ^ back to top If the loanable value of your securities drops below the required Gap amount, it is our practice to attempt to contact you and request additional collateral. However, Citigroup retains the right to sell any of your securities at any time and in any order, as it deems necessary based on market conditions and other factors. Such a sale of your securities may result in a capital gains tax liability for federal, state and local income tax purposes. You should consult your tax advisor on this issue. ^ back to top Proceeds from the sale of your securities will be held in the collateral account for the benefit of Citigroup. You may request reinvestment into another security (subject to collateral maintenance requirements), or you may request we apply the funds to your loan balance. Citigroup will generally not apply the proceeds to your loan balance without your instructions to do so, unless you are in default of any of your loan or account agreements. ^ back to top You may, as long as the Borrower is a member of your family (parent, spouse, adult child), and the property is located in a state that permits this type of loan. Please consult your Mortgage Specialist for more details. My existing securities account is held in my name, joint with my father, although he will not be a Borrower on my mortgage. May I pledge this account? Yes, but your father must sign a Security Agreement allowing the account to be held as collateral for the Bank and he will be bound by all of the restrictions of the Security Agreement. My existing securities account is in my name only, although both my husband and I will be borrowers on the mortgage. May I use this account as collateral? Yes. I have a Managed Account. Is this acceptable under the Dual Collateral Mortgage Program? Yes, as long as the balance in the account is sufficient, and you are not in default of any loan or account agreements. ^ back to top Your account must be opened and the securities on deposit not less than five business days prior to your scheduled closing. All account documentation must be completed by that time. ^ back to top As described above, the account must be opened five business days prior to the scheduled closing. You will be asked to sign a Security Agreement pledging the account to Citigroup and this form must be delivered to Citigroup prior to the scheduled closing. ^ back to top Yes, as long as the loanable value of the remaining investments in the account meet the program requirements. ^ back to top Yes. Citigroup requires all securities pledged for this purpose be freely
tradable and liquid. Under most circumstances, Citigroup will not accept
restricted stocks, securities covered by Rule 144, control stock, thinly
traded securities, portfolio concentrations in excess of 25%, stocks with
a per share price of less than $5, and securities with debt ratings below
the current guidelines. In certain instances, Citigroup stock or other
"affiliated securities" will not be accepted due to federal
banking regulations. ^ back to top Yes, if you are able to pledge sufficient securities to cover the entire amount of the loan during the construction phase. Citi Private Bank does not offer traditional, progress-based construction financing. Since we can't monitor the progress of your project or control payments to the contractors, we ascribe no value to the land or the partially completed building during construction. ^ back to top Traditional construction financing can be cumbersome and expensive. And, when your new home is done, and its time to obtain a permanent mortgage, interest rates may have moved adversely. You can liquidate investment assets to fund construction or use the Dual Collateral Program. ^ back to top No. We will close a mortgage today, using any of our standard products with maturities up to 30 years. We will take a mortgage on the property, and a pledge of your collateral account. (In this case the Gap is equal to the loan amount). We will also appraise your house now based on your plans and specifications to determine the "when completed" value. Once your new home is complete and you have obtained all certificates and approvals, we will look to release all or a portion of your securities, depending on the loan amount. A new appraisal of your property will be completed at this time. If your loan amount falls within our guidelines based on the newly constructed real estate alone, we will release the marketable securities collateral. Your Mortgage Specialist can help calculate the requirements based on your individual transaction. Consult your tax advisor regarding the deductibility of interest during, and after, the construction phase. ^ back to top No, the rate on your note will not change solely based on the Dual Collateral Program features, or the completion of your project. One of the main benefits of using this program for construction, in addition to avoiding the liquidation of your securities, is the ability to lock in today's interest rates. ^ back to top No, our current program does not allow for drawings over a period of time. The entire loan amount will be funded when the loan is closed. ^ back to top Yes. Citigroup is required to exclude from eligible collateral certain securities that it determines are "affiliate securities" under federal banking regulations. These include, generally, securities issued by Citigroup, Inc. or its affiliates and securities of certain investment funds sponsored and advised by Citigroup companies. *Currently not available in all states. All credit services
are subject to credit approval. Nothing contained herein should be construed
as a commitment to lend by Citibank, N.A. or any of its affiliates. Citigroup
subsidiaries may compensate affiliated companies for providing products
and services to clients. Opinions expressed herein may change without
notice and may differ from those expressed by departments or other divisions
or affiliates of Citigroup. In addition, opinions are not intended to
be a forecast of future events, a guarantee of future results and are
subject to change based upon market and other conditions. Citigroup does not provide tax or legal advice. You are advised to review any potential transaction with your tax professional to calculate actual benefits, if any, based on your unique situation.  |
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| "Citi Private Bank" is used by Citibank, N.A. and certain other bank and non-bank affiliates. All loans are made by Citibank, N.A., equal-housing lender. Loans are subject to Citigroup's mortgage qualifications and borrowers must also meet the eligibility requirements of Citi Private Bank. A mortgage commitment is contingent upon credit approval, a satisfactory sales contract, property appraisal, title search, mortgage insurance, if applicable and fulfillment of all closing conditions. | |||
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