Thursday, January 8, 2009
Citigroup On Board with Bankruptcy Mortgage Modification
In a news conference this afternoon,Senate Democratic leaders announced that Citigroup has endorsed the recently introduced bankruptcy bills S.61 and HR 200 which will allow Bankruptcy Judges to modify ("cramdown") mortgages on principal residences. This proposal will generally allow troubled homeowners with mortgage debt in excess of the home's value to be able to reduce the amount owed, the interest rates, and the mortgage's term. The bill will apply to all mortgages made prior to the enactment of the bill. It is anticipated that Citigroup's endorsement of the proposal will make it easier to bring other larger lenders on board quickly.
The media also reports that the National Association of Home Builders has also reversed its previous opposition to mortgage cramdown.