When using modgit on a Magento installation that's SCM'd by git any existing submodules break.

e.g.

$ cd /path/to/project/
$ modgit init
$ modgit clone module-name git://repo.git
$ git submodule init
No submodule mapping found in .gitmodules for path '.modgit/module-name/source'

One solution is to add .modgit to your gitignore, this means that it won't be tracked. I think this is mostly okay as any module updates will be tracked in the magento working directory. However this does limit portability.

Another solution is not to use submodule, making the problem moot, but that's not always practical.