In an effort to stave off new foreclosures, top Democrats in the Senate have been trying to push through legislation that would allow judges set new repayment terms for mortgage holders in bankruptcy court.
On Thursday, homeowners who have declared bankruptcy came one step closer to receiving help with their mortgages, as Citigroup Inc. dropped its opposition to giving bankruptcy judges the right to change the terms of mortgages.
The proposal from Sen. Dick Durbin (D-IL) to is the first of several pieces of legislation Democrats plan to push this year to give homeowners more leverage in bargaining with banks and mortgage-servicing companies.
As one of the nation’s largest mortgage lenders, members of the Senate sought Citigroup’s support because they believed that the measure would pass sooner with support from the banking industry.
Despite the company’s initial resistance, Citigroup Chief Executive Vikram Pandit praised the legislation as a way to help borrowers stay in their homes. “Given today’s exceptional economic environment, we support its swift passage,” he wrote in a letter to lawmakers on Thursday.