Emergency Mortgage Loan Modification Act of 2008
by admin ~ October 27th, 2008.With foreclosure rates soaring in most states, the Federal government is moving fast to remove an impediment to distressed debt restructuring on the end of holders of home mortgage loans. The Emergency Mortgage Loan Modification Act of 2008 establishes a standard for loan modifications or workout plans for pools of certain residential mortgage loans.
States where the mortgage servicer of such pooled home loans owes a duty to the securitization vehicle to maximize recovery of proceeds for the benefit of all investors and holders of beneficial interests in the pooled loans, in the aggregate, and not to any individual party or group of parties. Deems the mortgage loan servicer to be acting on behalf of the securitization vehicle in the best interest of all such investors and holders if the servicer makes certain loss mitigation efforts for a loan in or facing payment default in the reasonable belief that the particular loan modification, workout plan, or other mitigation actions will maximize the net present value to be realized over that which would be realized through foreclosure. Declares that, absent contractual provisions to the contrary, a servicer acting in a manner consistent with such duty shall not be liable to specified persons (including any person obligated pursuant to a derivatives instrument to make specified payments) for entering into a qualified loan modification or workout plan for loss mitigation purposes.
The Act defines “qualified loan modification or workout plan” as one that:
(1) is scheduled to remain in place until the borrower sells or refinances the property, or for at least five years from the date of adoption of the plan, whichever is sooner;
(2) does not provide for a repayment schedule that results in negative amortization at any time; and
(3) does not require the borrower to pay additional points and fees. In States that allowed a qualified loan modification or workout plan, negative amortization does not include capitalization of delinquent interest and arrearages. Defines “securitization vehicle” as a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that:
(4) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; and holds such home loans.
More information visit http://www.opencongress.org/bill/110-h5579/show
Category: Uncategorized | Tags: loan modification, mortgage loan
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