NEW YORK — Citigroup Inc. is halting certain foreclosures in the areas affected by the oil spill in the Gulf of Mexico.

The bank announced a three-month suspension, effective Thursday through Sept. 17, of foreclosure sales and notifications, and evictions on possessed properties for qualifying borrowers in the Gulf region with first mortgages held by CitiMortgage.

Citi expects about 1,000 borrowers to participate initially, but that number might climb.

The economic impact of the environmental disaster on the region is still unknown, but it's becoming clear that borrowers are hurting and banks need to respond, said Sanjiv Das, the chief executive of CitiMortgage. His unit will also cooperate with CitiFinancial, the bank's consumer finance unit that refinances mortgages mainly for customers with low credit scores and that has branches in the Gulf area, to help customers.

Das said he expects other banks to follow with programs like Citi's.

In the aftermath of Hurricane Katrina, banks implemented broad payment suspension plans for the Gulf region in response to the destruction of homes and the distress borrowers faced. While Hurricane "Katrina hit with great force" at once, the current disaster caused by the April 20 explosion of a BP Plc oil rig "is gradually evolving into a crisis for our customers," Das said in an interview with Dow Jones Newswires. "We cannot grasp the impact just yet."

"There is a lot of anxiety" and several customers contacted Citi about the distress impacting their jobs or businesses, Das said. Such concerns prompted Citi to initiate the program to give customers more time to work out their finances.

Citi Chief Executive Vikram Pandit said in a press release, "We aim to ease the burden on residents of the Gulf states. In the midst of this crisis, we will continue to explore ways to help people avoid foreclosure so they and their families can remain in their homes and have one less thing to worry about."

Citi has been looking at other potential programs that might help delinquent borrowers but nothing has been designed yet, Das said.

"Many small business put their homes as collateral to get working capital," and the oil spill will impact the mortgage payments through the businesses, Das said. Citi is already in contact with the Small Business Administration about potential programs helping distressed small business owners and "will accelerate those discussion" in the context of the oil spill, he said.

The Small Business Administration said in May it is making low-interest loans available to Gulf area small businesses in Louisiana, Alabama, Florida and Mississippi that suffer financial losses from the oil spill.

For now only mortgages within about 25 miles of affected coastal areas the banks holds on its balance sheet qualify, rather than all mortgages CitiMortgage services. Many loans Citi services were sold to investors. Das said he gave the owners of such mortgages heads-up about the suspension program, but has not yet approached them about expanding it to include mortgages Citi does not own.

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