More Foreclosure Fallout: Class Action Suit Claims CitiMortgage Misled Loan Modification Applicants

by:  Michael L. Rich

The fallout continues in the residential mortgage industry.  The New Jersey Law Journal reported last week that a putative class action on behalf of loan modification applicants alleges that CitiMortgage, the mortgage unit of CitiGroup, reneged on its agreement to do loan modifications in return for receiving $45 billion in bailout money.  Recipients of Troubled Asset Relief Program funds were required to participate in efforts to reduce foreclosures, including the loan-modification program.  However, the plaintiffs in Silva v. CitiMortgage claim that CitiMortgage has only feigned compliance with the government’s loan-modification program, known as Home Affordable Modification Program.  The complaint alleges that CitiMortgage “never had any intention to allow widespread modification for homeowners in need.”   CitiMortgage is expected to mount a vigorous defense.  More details on this later as the case proceeds.

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