Citigroup (C)

Proposed U.S. Mortgage Modification Legislation

In January 2009, both the U.S. Senate and House of Representatives introduced legislation (the Legislation) that would give bankruptcy courts the authority to modify mortgage loans originated on borrowers’ principal residences in Chapter 13 bankruptcy. Support for some version of this Legislation has been endorsed by the Obama Administration. The modification provisions of the Legislation require that the mortgage loan to be modified be originated prior to the effective date of the Legislation, and that the debtor receive a notice of foreclosure and attempt to contact the mortgage lender/servicer regarding modification of the loan.

It is difficult to project the impact the Legislation may have on the Company’s consumer secured and unsecured lending portfolio and capital market positions. Any impact will be dependent on numerous factors, including the final form of the Legislation, the implementation guidelines for the Administration’s housing plan, the number of borrowers who file for bankruptcy after enactment of the Legislation and the response of the markets and credit rating agencies.

Proposed U.S. Mortgage Modification Legislation

In January 2009, both the U.S. Senate and House of Representatives introduced legislation (the Legislation) that would give bankruptcy courts the authority to modify mortgage loans originated on borrowers’ principal residences in Chapter 13 bankruptcy. Support for some version of this Legislation has been endorsed by the Obama Administration. The modification provisions of the Legislation require that the mortgage loan to be modified be originated prior to the effective date of the Legislation, and that the debtor receive a notice of foreclosure and attempt to contact the mortgage lender/servicer regarding modification of the loan.

It is difficult to project the impact the Legislation may have on the Company’s consumer secured and unsecured lending portfolio and capital market positions. Any impact will be dependent on numerous factors, including the final form of the Legislation, the implementation guidelines for the Administration’s housing plan, the number of borrowers who file for bankruptcy after enactment of the Legislation and the response of the markets and credit rating agencies.