Citigroup announced a new test plan to help homeowners who have lost their jobs. Under the plan, mortgage payments will be reduced to $500 for up to three months while the homeowners search for new jobs. During the three month period, Citi will refrain from foreclosing on the homes. If a homeowner lands another job, Citi will then consider a permanent loan modification.

HOW DOES THIS PLAN AFFECT YOU?

It probably doesn’t, even if you have a loan with Citi. Sanjiv Das, chief executive of subsidiary CitiMortgage, only estimates that this plan will affect thousands of homeowners during the next two years.

Why not tens of thousands? Or hundreds of thousands?

Well, because the plan only applies to a small pool, a very small pool, of homeowners who have home loans with Citi.

• The program does not apply to subprime subsidiary CitiFinancial (which is where a higher percentage of loans are in default)
• The program does not apply to loans sold by Citi to investors even when the loans are still serviced by Citi
• The loan must be less than $417,000
• You must live in the home
• You must be at least 60 days past due on your mortgage
• You must prove that you have registered for unemployment
• If your taxes and insurance exceed $500, you must pay all of your insurance and taxes
• You must pledge that you are looking for a job

This isn’t as sweeping of a change as we’d like to see, but it is creative, practical and a step in the right direction. If the plan works, over time it could be adopted by investors and other lenders.