WSJournal – “Servicers are limited in their ability to modify mortgages”

Key points
-“servicers are limited in their ability to modify mortgages”

READ: they have no authority to modify nor authority to foreclose
This is why so many are “strung along” thinking they are waiting to be approved for a loan modification and at the eleventh hour are told they “weren’t approved” and then the following week get a foreclosure notice. Get these “promises” communicated in WRITING or record them.

-“40% of borrowers were 60 days past due within 8 months after their loan was modified”

What it doesn’t say is that in modifying their loan they verified or affirmed a non-existent obligation AND likely agreed to “waive all claims” against everyone…

-“loan modifications that include a principal reduction are less likely to re-default”

If you are not getting a principal reduction that considers “affordability” AND the current value of the property today you are wasting your time or probably prolonging the inevitable. In order to get principal reductions you need some leverage, affirmative defenses, counterclaims.

MOST OF ALL – DON’T WAIT until a week before a Summary Judgment hearing or Trustee Sale to try to act….you must be PROACTIVE and get your ammo ready before the enemy is at your door. THIS IS WAR PEOPLE – THE HOMEOWNERS WAR right here on our soil and its your home they want.

Wall Street Journal   FEBRUARY 11, 2009


The Obama administration provided few details about its plans to address the foreclosure crisis when laying out its economic-recovery program Tuesday, highlighting the challenges of creating a program that is fair and effective.
The administration’s efforts are being complicated by a weakening economy. Nearly five million families could lose their homes between 2009 and 2011, according to Moody’s “The ground is shifting,” said Tom Deutsch, deputy executive director of the American Securitization Forum, an industry group. “We have a lot more job loss and a lot more pessimistic expectations on home prices.”
Housing and Urban Development Secretary Shaun Donovan and Treasury Secretary Timothy Geithner will be meeting Wednesday to discuss possible approaches to the foreclosure crisis.
One question facing the administration is how to win investor support for modification efforts while providing meaningful relief to borrowers. At a town-hall meeting Tuesday in Fort Myers, Fla., President Barack Obama suggested that he would propose legislation to make it easier for loan-servicing companies to ease up on troubled borrowers while taking steps that might win investors’ support. Right now, he said, servicers are limited in their ability to modify mortgages that have been packaged into securities and sold to multiple investors. In addition, “the borrower is going to have to probably — if they get some assistance — agree to give up some equity once housing prices recover,” the president said.
Another challenge is determining who should get help. In Fort Myers, those facing foreclosure aren’t just local residents hurt by job losses, but also real-estate speculators. Another worry is moral hazard, or how to help those truly in need without encouraging others to fall behind on their payments.
Government officials are also expected to create national standards for loan modifications that would be adopted by Fannie Mae and Freddie Mac. But there is little data on what types of workouts are most cost-effective. Data released in December by federal banking regulators show that more than 40% of borrowers were at least 60 days past due eight months after their loan was modified. Critics say redefaults are so high because mortgage companies aren’t doing enough to make payments more affordable.
Forty-seven percent of loan modifications completed in November resulted in higher payments for borrowers, typically because unpaid interest and fees were added to the loan balance, according to a study by Alan M. White, a professor at Valparaiso University Law School in Indiana.
Coming up with an effective modification is complicated by the fact that many troubled borrowers also have home-equity loans or credit-card debt, auto loans or other obligations that can make it difficult to afford even a lower mortgage payment. Other borrowers may be able to afford a modified payment, but lack the reserves to deal with unexpected bills.
“You don’t want to modify a loan that you think will eventually redefault,” said Thomas Lawler, an independent housing economist. “All that will do is delay the process and increase the cost.”
With home prices tumbling, some analysts have been pushing for mortgage companies to reduce loan balances. Borrowers whose loan modifications include a principal reduction are less likely to redefault, according to an analysis by Credit Suisse, but mortgage companies have thus far been reluctant to write down loan balances.
A focus for the government has been on how to determine the “net present value” of homes. Government officials think that if they can agree on a common metric for determining a home’s value, they can expedite how the loan is modified.
—Michael M. Phillips and Damian Paletta contributed to this article.
Write to Ruth Simon at

3 Responses

  1. BANKSTERS will continue their GREED SCAM perpetrated against the American People as long as SUCCERS continue to play their game with their self-serving rules! To grasp a better understanding of their Greed Machine, get a copy of the Book(s): “THE CREATURE FROM JEKYLL ISALND” and “Money Mechanics”! Also, buy at Amazon: ” The Foreclosure Defense Guide”! Get yourself the right brave & determined Atty/Law Firm knowledgable to cause Discovery Audits for Evidence/ Facts/Truth and help in LITIGATION against the CROOKS/THIEVES!!!
    Also, go to for an education & help….

  2. Fill out the form and DOWNLOAD this excellent in-depth paper written by Talcott J. Franklin, Partner of Patton Boggs LLC in which he warns there is a stealth provision in H.R. 1106 that provides “servicer safe harbor for mortgage loan modifications.” We’re talking about The Helping Families Save Their Homes Act.

    To quote Franklin, “This immunity raises difficult and complicated concerns involving whether servicers actually need the immunity, whether Congress should pass a law that lessens oversight of servicers, whether the immunity will be abused, and whether the legislation can pass Constitutional muster.”

    GO TO Section V. Retroactive Immunity from Repurchase Liability, and work your way down to page 31 that begins Safe Harbor May Contain a Stealth Provision that Grants Retroactive Immunity for Lender Fraud and Other Malfeasance.

    Noteworthy is Section VII. Servicer Safe Harbor May Undermine Constitutional Protections

    The paper also contains excellent explanations of the securitization process, and the conflicting interests of modifiers, investors, insurers, trustees, borrowers, et al.

    Franklin reminds us that “roughly 88% of subprime loans and 69% of all residential mortgage loans are serviced by 18 servicers. Of these 18 servicers, ten of them or their affiliates received funds under Treasury programs established as a result of EESA. All of these servicers either themselves or through a corporate affiliate made or sold into the securitization.”

    I have not been able to track this stealth safe harbor provision retroactively foreclosing servicer/lender/originator liability by giving them immunity whenever a loan gets modified.

    Can someone track how this legislation turned out? Did the safe harbor provision survive Obama’s signature?



  3. Servicers doing modifications is the biggest scam in history behind the mortgage pyramid scheme. The worst part is that the federal Government and most non-profits still refer and recommend for people to go through them.

    When will attorneys and the people realize that all your rights as a consumer have been obliterated and take their claims to the courts.

    get your docs and transaction audited, and hire an attorney, or at least do something constructive, what makes any one believe that modification is the answer, when the whole process is based on the fact that the consumer needs to make enough money to pay the modified mortgage which in most cases is worse than the original mortgage, and if your are one of the lucky 4% of all who apply and get it, you must have been very lucky to have gotten the alleged agreement of all the investors who own the rights to your debt, which I find difficult to believe.

    I get the impression that many attorneys are shy to go to court because they fear losing, but what if you really know the other side is full of fraud and you just did not choose to go through the right venue. I do understand that there are states that have court systems that are not only conservative in nature but also corrupt in reality. The worst you can do is not to try r to fight the good fight. If it did not succeed in district court take it to federal, if it did notwork there take it to bankruptcy. Your client and your families deserve the fight for your rights and the repair of your good character and standing.

    I refuse to give up in a fight where I know that I am on the right side of things. Why should we reward those who have actively conspired to destroy the fabric of this country, the American dream.

    Most servicers know from the start what they can do or not on each case. They have a pooling and servicing agreement. What makes you believe they will go against their interests and their clients interest (the trust pools or pretend lenders).

    What a bunch of crooks, and now Fannie or Freddie have hire OCWEN to help them process their modifications. A predatory outfit to “help” whose who they have already hurt.

    They still brew the same stew, and no body says anything.

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