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.