Several mortgage investors have urged the government to amend its $75-billion housing rescue plan. The investors, who collectively hold billions of dollars in securities backed by residential mortgages, said the legislation violates some of their rights and that they are considering legal action.
The investors have met repeatedly with Treasury officials but are still unsatisfied with the plan. According to them, certain measures in the bill prevent them from filing lawsuits against the servicers responsible for collecting payments and granting loan modification.
Jeffrey Gundlach of the TCW Group, a leading investment management company, says that the investors’ rights stipulated in security contracts should be honored in all governmental plans. The TCW Group currently manages $52 billion worth of residential mortgage-backed securities.
The plan aims to help an estimated four million borrowers through various loan/mortgage modification programs. Under the program, mortgage loans unsettled as of December 31st were lumped into securities, which were then sold to local and foreign investors. Together, these mortgages total approximately $1.9 trillion.
The problem, says Inside Mortgage Finance, is that is that these packages do not have government backing. Mortgage servicers, therefore, would be more willing to modify these loans than those they own.
They also added that a modification on the first loan makes the second less burdensome, but modifying both may be a better solution. Besides affording a better payment scheme, it will also make it less likely for mortgages to become larger than the home is worth. Administration officials say they are working out an incentive plan to get servicers to discharge these second mortgages.
What Can A Loan Modification Attorney Do For Me?
13 years ago
0 comments
Post a Comment