A member
forwarded this article to me this morning. I haven't seen or heard
anything about it before this. This particular ruling on short-sale and
loan modification relief is limited in that it apparently decided that
the matter is more appropriately handled by state courts rather than
Federal - but...
If this
becomes a precedent on investor rights it will sound the death knell
for an already shaky loan mod & short sale program. Sounds like
the banks are hung out to dry here . directed by legislature to modify
loans and expedite short sales, prohibited by this ruling from doing
that to the detriment of their investors.
WOW. I
hope more agile minds than mine are dealing with this mess.
A federal judge in Manhattan has rejected an argument by Countrywide
Financial
seeking certain protections from investor lawsuits under new
legislation intended to encourage modifications of home loans, Gretchen
Morgenson reported in The New York Times.
“I view this as an opening salvo and a demonstration that investors do
have contractual rights, even when it is politically unpopular,” said
William A. Frey, one of the investors who brought the lawsuit. “This is
ultimately going to be one of many legal battles over who should pay
the hundreds of billions of dollars in losses on mortgages.”
Bank of America, which took over servicing of the
investors’ loans
when it bought Countrywide in 2008, is defending the case. It argued
that the matter belonged in federal court and that
any contractual obligations to repurchase modified loans were trumped
by the Helping Families Save Their Homes Act of 2009. Under that law,
servicing companies that agree to modify loans receive some protection
from liability arising from the loan changes.
Judge Holwell ruled that the immunity granted under the
legislation
did not prevent Countrywide’s investors from trying to enforce their
rights under the mortgage securities contracts.
Investors’ lawyers hailed the decision.
Read the full article here: Countrywide Loses Ruling in
Mortgage Suit
;)
;)
Investors have rights. That what contracts are made of. We'll just have to wait and see how this turns out.