Citygroup Will be Supporting a Deal for Mitigating Foreclosures
Posted on January 12, 2009
Filed Under Foreclosure Homes | 1 Comment
The Democrats of the Senate recently announced that a deal has been made with Citygroup for supporting a bill that will largely mitigate foreclosure woes for those who are facing bankruptcy. The announcement was made at a press conference in Washington D.C. – the hosts being senators Richard Durbin, Christopher Dodd and Charles Schumer. This new law will give the judges dealing with bankruptcy cases the right to alter mortgage terms. Citgrou has been under scrutiny from the members of the new Congress. The Democrats have questioned its sincerity in taking measures to help foreclosure victims.
The senators are hopeful that with Citi giving its support for this law other financial bodies will be won over. Hitherto the mortgage lenders had zealously opposed any such move till the passing of the bailout package of $700 billion last October. This time there is hope. Durbin said, “I think this can happen.”
Citi has the distinction of being the first banking institution to give its support to this move. Other banks have already shown positive interest in the matter. The names of the specific lenders have not been mentioned.
Schumer said, “My office has been called by heads of most of major banks saying they want to hop on board. The fact that (Citigroup) and soon other major institutions will start supporting this provision is a breakthrough.” He anticipates that this will ultimately lead to putting the real estate market back on rails. Schumer explained, “You’re not going anywhere until you get a floor to the housing market.”
The Mortgage Bankers Association swiftly registered its opposition to the new law saying that it will have a “destabilizing effect” on a market that is already turbulent. There are still a number of important points that require addressing, they said in a statement. Their suggestion was that the law should be applicable only to the sub-prime loans. The association categorically stated, “We would also want to see a sunset date that limits how long judges would be granted this extraordinary power.”
The bill would be applicable only to those loans contracted previous to its passing said the senators. Those who want to benefit from it should contact their respective lenders ten days before filing bankruptcy.
The legislation has been termed cram-down law. It is apprehended that by it mortgage costs on all types of house loans would be increased, as the lenders will try to make up for the losses incurred because of this bill.
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