"Foreclosure Alternatives," the new foreclosure alternative program announced today by Citigroup, may help cash-strapped homeowners in some regards, but it is also erroneously being touted as a way to do "less" damage to person's credit rating. Moreover, in many ways, the new initiative will benefit Citigroup itself far more than it will their borrowers.

Under its foreclosure alternative program, Citigroup would allow a homeowner at risk of foreclosure to stay in his or her home for six months -- as long as the homeowner turns over the deed to the property. During the six-month period, the homeowner must keep the property in good condition. After that, the homeowner must move. Citigroup will provide relocation counseling and pay $1,000 or more in relocation expenses. Citi will also consider covering other costs too, such as taxes, insurance or homeowner association fees incurred while the homeowner remains in the house.

While these are all clearly benefits that would aid financially-troubled homeowners, Citi's new foreclosure alternative program is also being hailed as a way to help individuals and couples minimize the impact of foreclosure on their credit scores.

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