Why Can’t You Get a Loan Modification? Lawsuit Highlights Problems.
By Brett Weiss, Maryland Bankruptcy Attorney on Aug 20, 2009 in Foreclosure News, Mortgage Issues, Mortgage Modification, Mortgage Reform, Mortgage Servicer Abuses
A federal judge refused to let a lawsuit against Countrywide Financial Corporation be transferred to federal court today. Two investors in mortgage-backed securities sued Countrywide over plans to make up to $8.4 billion in loan modifications as part of a settlement with 15 state attorneys general. They argued most of the loans at issue aren’t owned by Countrywide but were instead sold to trusts that securitized them, with Countrywide only acting as servicer of the loans, and that loan servicing companies that agree to change the terms of mortgages are breaching contractual obligations to owners of those loans.
This complex issue, of little interest to anyone other than lawyers and bankers, puts a serious crimp in efforts to modify mortgages. The investors often are unknown, difficult to contact, and hard to get to approve modifications.
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