Citigroup Inc.

Short-Term Programs. Citigroup has also instituted short-termprograms (primarily in the U.S.) to assist borrowers experiencing temporaryhardships. These programs include short-term (12 months or less) interestrate reductions and deferrals of past due payments. The loan volumeunder these short-term programs has increased significantly over the past18 months, and loan loss reserves for these loans have been enhanced,giving consideration to the higher risk associated with those borrowers andreflecting the estimated future credit losses for those loans. See Note 1 to theConsolidated Financial Statements for a discussion of the allowance for loanlosses for such modified loans.The following table presents the amounts of gross loans modified undershort-term interest rate reduction programs in the U.S. as of December 31, 2010:December 31, 2010In millions of dollars Accrual Non-accrualCards $2,757 $ —Mortgage and real estate 1,634 70Installment and other 1,086 110Significant short-term U.S. programs include:North America CardsUniversal Payment Program (UPP). The North America cardsbusiness provides short-term interest rate reductions to assist borrowersexperiencing temporary hardships through the UPP. Under this program, aparticipant’s APR is reduced by at least 500 basis points for a period of up to12 months. The minimum payment is established based upon the customer’sspecific circumstances and is designed to amortize at least 1% of the principalbalance each month. The participant’s APR returns to its original rate at theend of the program or earlier if they fail to make the required payments.U.S. MortgagesTemporary AOT. This program is targeted to Consumer Financecustomers with a temporary hardship. Examples of temporary hardshipsinclude a short-term medical disability or a temporary reduction of pay.Under this program, which can include both an interest rate reduction and aterm extension, the interest rate is reduced for either a five- or an elevenmonthperiod. At the end of the temporary modification period, the interestrate reverts to the pre-modification rate. To qualify, customers must make apayment at the reduced payment amount prior to the AOT being processed.In addition, customers must provide income verification, while employmentis verified and monthly obligations are validated through an updated creditreport. If the customer is still undergoing hardship at the conclusion of thetemporary payment reduction, an extension of the temporary terms can beconsidered in either of the time period increments above, to a maximum of24 months. Effective December 2010, the timing of the qualifying paymentis earlier and updated documentation is required at each extension. Thesechanges are expected to reduce overall entry volumes. In cases wherethe account is over 60 days past due at the expiration of the temporarymodification period, the terms of the modification are made permanent andthe payment is kept at the reduced amount for the remaining life of the loan.U.S Installment LoansTemporary AOT. This program is targeted to Consumer Financecustomers with a temporary hardship. Examples of temporary hardshipsinclude a short-term medical disability or a temporary reduction of pay.Under this program, which can include both an interest rate reduction and aterm extension, the interest rate is reduced for either a five- or an elevenmonthperiod. At the end of the temporary modification period, the interestrate reverts to the pre-modification rate. To qualify, customers must make apayment at the reduced payment amount prior to the AOT being processed.In addition, customers must provide income verification, while employmentis verified and monthly obligations are validated through an updated creditreport. If the customer is still undergoing hardship at the conclusion of thetemporary payment reduction, an extension of the temporary terms canbe considered in either of the time period increments referenced above,to a maximum of 24 months. Effective December 2010, the timing of thequalifying payment is earlier and updated documentation is required ateach extension. These changes are expected to reduce overall entry volumes.In cases where the account is over 90 days past due at the expiration of thetemporary modification period, the terms of the modification are madepermanent and the payment is kept at the reduced amount for the remaininglife of the loan.Short-Term Modification Programs—SummaryThe following table sets forth, as of December 31, 2010, information relatedto Citi’s significant short-term U.S. cards, mortgage, and installment loanmodification programs:Averageinterest ratereductionAverage timeperiod forreductionIn millions of dollarsProgrambalanceProgramstart date (1)UPP $2,757 22% 12 monthsMortgageTemporary AOT 1,701 1Q09 3 8 monthsInstallmentTemporary AOT 1,196 1Q09 4 7 months(1) Provided if program was introduced after 2008.108