Citi to allow jobless to pay less on loans- WSJ

March 3 (Reuters) - Citigroup Inc (C.N) will announce a new program on Tuesday aimed at reducing financial srains on unemployed homeowners, the Wall Street Journal said.

Under the program, Citigroup will temporarily lower mortgage payments to an average of $500 a month for certain borrowers who have recently lost their jobs and are at least 60 days behind on their mortgage payments, according to the paper.

Borrowers will be allowed to make the lower payments for three months and Citigroup will waive interest and penalties during this period, the paper said.

"We expect that there will be thousands of people we can help," Sanjiv Das, chief executive of CitiMortgage, told the paper.

Das told the paper that rising unemployment is "the single biggest issue facing mortgage servicers."

To qualify for the program, borrowers must live in the home and have a mortgage that is owned and serviced by CitiMortgage, the paper said, adding that the program applies only to loans of $417,500 or lower.

Das told the paper that the federal government "had no role at all" in the company's latest loan-modification effort.

The new program "was created by us, developed by us and is now being implemented by us," he told the paper. "There was no pressure at all."

Citigroup and the United States reached an agreement last week in which the government will substantially raise its stake in the bank.

U.S. banks which have accepted government aid amid a crippling financial crisis are under intense political pressure to increase lending to spur flagging economic growth and to modify mortgage terms for some homeowners who have been badly hit by the crisis. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Kim Coghill)