Citigroup Reaches Deal With Lawmakers on Home Loans

Citigroup Reaches Deal With Lawmakers on Home Loans - 2/9/2009

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Citigroup Reaches Deal With Lawmakers on Home Loans
Renae Merle and Lori Montgomery

Washington Post. February 9, 2009
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EXCERPT: Citigroup, one of the nation's largest lenders, yesterday agreed to abandon its long-standing opposition to a plan to let bankruptcy judges modify the terms of mortgages, a move that could help millions of distressed borrowers stay in their homes, Senate Democratic leaders said yesterday. The startling turnaround reflects the changed political and economic realities of the nation's deepening recession. Citigroup's approval puts pressure on other lenders, potentially opening a new and more aggressive chapter in the government's foreclosure-prevention effort by giving some of the most troubled borrowers leverage to force lenders to forgive debt. Democratic lawmakers praised the agreement as a breakthrough and pledged to add the measure to the economic stimulus package moving through Congress. Although the support of the banking industry would not guarantee passage, they said, it would go a long way toward breaking down opposition among Republicans and moderate Democrats who torpedoed the idea in the Senate last year. And lawmakers have yet to win the support of the Mortgage Bankers Association, a large lobbying group that has previously helped defeat the change. "I want to commend Citigroup," said Sen. Richard J. Durbin (D-Ill.), the No. 2 Senate Democrat. "They showed real leadership on this, the first major financial institution to step forward and say, 'We understand this is a crisis in America.' The current efforts, as good as they may be, have not resulted in a dramatic change or reduction in the number of foreclosures."

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