Foreclosure Fraud Settlement Docs (IV): Association of Mortgage Investors Planning to Challenge in Court

One of the things I looked at in an earlier installment of the foreclosure fraud settlement documents is how banks can satisfy their obligations by modifying mortgages they don’t own. HUD again tried to push back on this with a blog post about “myths v. facts” in the mortgage settlement (I’ll just say that I’ve taken everything I’ve written about today from the actual settlement documents). Here’s their point on that front:

Myth: The settlement will be paid on the backs of teachers, firefighter and unions because of pension or other investments in private label securities.

Fact: Participating banks own the vast majority of the mortgage loans that this settlement is expected to affect. The settlement could affect some investor-owned loans, depending on existing agreements servicers have with those investors. When banks weigh which mortgage loans to modify as part of this settlement, they will do so based on first analyzing the costs and the benefits of minimizing their losses.

If a loan modification, including principal reduction, is projected to cost the creditor or investor less than foreclosure, the creditor will earn more on that loan.

In other words, this settlement will not force investors to incur losses. That’s because any loan modification tied to this settlement will result in more of a financial return for an investor than a foreclosure would.

This has been the party line from the outset, but it’s only a guess. HUD anticipates that bank-owned loans will be modified first. They don’t say exactly why, but it’s just expected. Common sense, on the other hand, dictates that a bank will pay off their penalty with someone else’s money before they pay it off with their own.

Rest here…

~

4closureFraud.org