Banking giant gives nod to legislation that would allow judges to alter mortgages for homeowners who have filed for bankruptcy.

NEW YORK (CNNMoney.com) -- Citigroup reached an agreement with Democratic lawmakers Thursday on legislation that would allow judges to reduce mortgage debt for individuals who have filed for bankruptcy.

Sen. Dick Durbin of Illinois, the bill's architect, said he hoped the participation of Citigroup would entice other mortgage lenders to sign onto the program.

"I hope other institutions will follow suit," he said. Durbin appeared at a press conference along with fellow sponsors of the bill, Sen. Christopher Dodd of Connecticut and Sen. Charles Schumer of New York.

Until recently, members of the banking industry, including Citigroup (C (C, Fortune 500), Fortune 500), as well as other housing-related groups like the National Association of Realtors, have criticized the notion of allowing the courts to have a say over their mortgage portfolios.


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