Citigroup May Agree To Allow Residential Mortgage Modifications In Chapter 13 Bankruptcy – This Could Impact Foreclosure Resolution In A Very Big Way

I got this very important email today from the President of NACBA advising that Citigroup is supporting residential mortgage modification bankruptcy legislation. This could be a very good thing for homeowners. Business Week is also reporting this also. Here is the email

“In a major breakthrough on the effort to pass legislation allowing for mortgage cramdowns in bankruptcy, Senator Durbin, Chairman Conyers, Rep. Miller and others announced this afternoon that Citiigroup, a major player in the mortgage market, is supporting the recently introduced S. 61 and HR 200, with three modifications: (1) the provision will apply to existing loans only; (2) homeowners would be required to certify that they attempted to contact their lender regarding loan modifications before filing for bankruptcy unless the petition is filed less than 30 days before a foreclosure sale; and (3) The amendment to section 502(b) would apply only to Truth in Lending rescission claims, with language that it does not create a negative inference for other debtor rights.

NACBA’s Legislative Committee has reviewed the language and is supporting the compromise. Citigroup has sent a letter to House and Senate leaders expressing their support for the legislation, as modified, and urging its inclusion in the economic recovery plan now being developed.

We will continue to report on new developments as they occur.

Maureen Thompson, NACBA Legislative Director”