Are all Mortgage Backed Securities being denied for Loan Modification? From what I have read they are all being denied for modification and short sale. So have I been wasting my time this whole year. I finally was able to get the Office of the Comptroller to light a fire under WF and they came back with a proposal for a reduced payment for 10 months and then back to original loan terms. Which is an ARM.
That's an interesting question. Can you post the place you read this? Perhaps that will enable more informed members to respond to the specifics.
Non GSE (not Fannie/Freddie/Ginnie for FHA-VA) privately pooled mortgages are a huge problem to get modified since they have been sliced and diced into many parts.
One investor may own pieces of 1000 or 10,000 mortgages and one mortgage may be owned in bits by more than one investor as I understand it.
There are often many restrictions in the Pooling Agreements - often the agreement says that they can not be modified. All HAMP mods require investor approval, usually not a problem with the GSE's but huge with private pools.
If the agreement does not forbid modification, servicers are still concerned over getting sued by the investors, although the Net Present Value Test is suppose to be a safe harbor.
When we took out mortgages we had no idea they would be sold and resold, sliced and diced. Who they would up with - Fannie which is usually very good, or private pool which is usually bad, was simply blind luck.
Fannie/Freddie/Ginnia are often called the investor. But they may not own the mortgage but they have guaranteed them. When the GSE's agree to a modification they pull them out of the pool which they have the right to do and wind up paying off the investor as I understand it and than they own the modified mortgage directly and take all the risk of its future default.
This is a reason most Republicans don't like Fannie/Freddie or mods, because it makes the U.S Treasury in essence the owner of the mortgages. The GSE's need more and more Treasury funding to do this which of course makes most Republicans very upset.
On 12/23 Obama signed an executive order removing the caps on the amount of losses the Treasury could fund. This was critical to HAMP especially if there are any any changes that would help borrowers especially if the GSE's have to take larger losses if they approve principal reductions.
Again this upsets those that fear or hate "big bad government" but there basically is no private mortgage market today. The GSE's guarantee something like 70% of all U.S. 1st mortgages and there is no private alternative for what is critical for the recovering economy. With unemployment the mortgage situation is only going to get worse.
For others this is a legitimate role of government to support the mortgages when the alternative is mass foreclosure sales. Especially when modifications are far less costly to taxpayers than the huge discount usually associated with foreclosure sales.
You may argue why did the GSEs guarantee so many mortgages but this goes back years. There is a video of Bush at I believe it was a NAACP convention basically telling banks they had to loan to as many people as possible, including low income so we would have an "ownership society". Congress, Treasury. Fed all went along so there is plenty of folks to blame. But the Bush speech was very powerful and direct to get the banks to lend to most everyone.
Than we had the subprime crisis with the really bad loans that were made, and now its spread into prime and luxury home loans.
Thank you very much for that clear concise explanation.
Hey Dave, thanks for the sharing your thought. Are there any way we can can retrieve mortgage pooling agreements to confirm if loan can be or cannot be modified? If so, can you help give us more insights on how to do this and which portion of the pooling they normally emphasize this? I really appreciate your advise on this.
-john
unfortunately I don't know any way to find out other than from the servicer finding out and telling us, but lots of luck.
But sadly I believe most if not all the private pools say they can't be modified but I do not have a source just blog somewhere I saw where it was discussed
Have you being sucsessful in geting a modifications with your "private investor"? My mortgage is with Suntrust Mortgage, but they told me that I have a master servicer (Wells Fargo) who forbid modifications on my loan. What can I do and where can I go to ask for help?Originally Posted by 22lkj
Dave, doesnt this then raise a "MERS" type defense?One investor may own pieces of 1000 or 10,000 mortgages and one mortgage may be owned in bits by more than one investor as I understand it.
There are often many restrictions in the Pooling Agreements - often the agreement says that they can not be modified. All HAMP mods require investor approval, usually not a problem with the GSE's but huge with private pools.
If the agreement does not forbid modification, servicers are still concerned over getting sued by the investors, although the Net Present Value Test is suppose to be a safe harbor.
You would have to know which trust it was sold into. You can then look it up on the EDGAR database by following these steps.
http://mattweidnerlaw.com/blog/2010/...eclosure-case/
The living lies site also offers a title and securitization search, but it is rather costly.
Attn: All Homeowners who have been wronged by WF!!! Now is your chance to join in a class action filed against Wells Fargo November 23, 2010 by the Law Offices of Harwood Feffer LLP for CA residents. The lawsuit alleges WF mislead many homeowners they had to be in default to qualify for a loan modification and then turn around and foreclose or short sale their homes!!!! For more information please go to www.whesp.com and click on the America's Servicing Company & Wells Fargo tab and it will tell you how to join in on this class action!!
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