The new bill the Senate just overwhelmingly passed does a couple of very important things that ought to make loan modifications much easier to obtain soon. The most important thing it does is protect loan servicers from being sued if by their investors for modifying loans. Right now many loan servicers must answer to investors and as a result they are in danger of being sued if they modify loans for borrowers in trouble. The net result of this fear is a lot of borrowers are being turned down for loan modifications and that leads to more foreclosures and that leads to further declines in the housing market. The new bill grants servicers protection from these lawsuits. That ought to lead to a lot more loan modifications if it passes.
Here is a link to the bill (S 896) summary and a few quotes:
Shields servicers from liability for implementing mortgage loan modifications or loss mitigation plans if they are in compliance with fiduciary duties required by the Truth in Lending Act (including any refinancing undertaken pursuant to standard loan modification, sale, or disposition guidelines issued by the Secretary of the Treasury).
Amends the National Housing Act to modify the HOPE for Homeowners Program (HOPE).
Authorizes the Secretary to establish a payment of up to $1,000 per insured loan to the loan servicer of the existing senior mortgage for every loan insured under HOPE.
May 15th, 2009 at 10:11 pm
Does it help mortgage base securitized loan, also called CMBS loan? This type of loan I am being told is an altogether a different animal and the bond holders do not allow any loan modification to the loan servicer. Is it true?