Abigail Field | Turns out the Mortgage Deal Is Still Not Done

Turns out the Mortgage Deal Is Still Not Done

Q: When is a deal not a deal?

A: When the deal documents punt on contentious issues, merely agreeing to agree later.

Sadly, that’s what this “deal” does. This “deal” is a hybrid contract and term sheet, with all the crucial, operational aspects of compliance unresolved. A smallish to-be-dealt-with-later item is the timing for implementing the servicing standards. The biggie is the Work Plans; those have not been negotiated at all.

Yes, part of compliance has been finalized; the metrics, and the basic enforcement structure. But it’s not enough to have metrics; you also need processes for gathering the metric data and computing the results. Similarly you need more than a structure for enforcement; you need how-to details. The not-yet-existing Work Plan will cover all that. Worse, the negotiations will happen while the clock is ticking on the deal.

Servicing Standards Take Effect On a Date TBD

When the deal is approved, not all of the shiny new servicing standards take effect. Some get phased in over time. Which standards will take effect when? Who knows–there’s a matrix to be negotiated. Moreover, it’s not clear to me if the matrix is currently being negotiated, or if the negotiations start once the deal gets Judge Rosemary M. Collyer‘s approval. (See E-1 at A.) Regardless, the day the headlines scream that the deal’s been approved and in effect, no homeowner can paste Exhibit A up on the fridge and rely on it as a guide to what her servicer’s supposed to do with her mortgage.

Rest here…



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