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If you are eager to learn the details on the national mortgage settlement that regulators recently announced, your wait may be over in a few days.
I spoke to Laurence Platt, a lawyer at K&L Gates, who is part of the legal team representing one of five banks in the settlement. The team is in the process of reviewing and tweaking the language of the 45-page settlement, and Platt expects the banks will be ready to sign the settlement in about a week. Once signed, the long-awaited settlement will be submitted for court approval. That's when you'll get to take a peek at the document that is frightening many in the lending industry.
Platt was a panelist at the Mortgage Bankers Association servicing conference in Orlando, Fla. He says, in short, that this is how the settlement will help borrowers in the long run.
Under the settlement, "borrowers get lots of bites at the apple" to avoid foreclosure, he says. Servicers won't be able to "consummate the foreclosure until they bend over backwards and give borrowers many chances." Those chances will include additional notification requirements before a loan is referred to foreclosure, offers to modify the loan or refinance, additional appeal rights and several other initiatives. He couldn’t be too specific about the terms because of confidentiality issues because the settlement isn't finalized yet.
Platt says the settlement is divided in two parts: Relief for borrowers and changes in servicing standards (designed to protect borrowers more effectively).
Ironically but not surprisingly, much of the relief portion doesn’t apply to loans owned or guarantee by Fannie Mae and Freddie Mac.
Why? Simply put, because this is a case of "schizophrenia in federal housing policy," he says.
Regulators keep pushing banks to write-down loans for struggling borrowers. Meanwhile, Fannie Mae and Freddie Mac say there's no way they'll allow that to happen. Together, the two entities own or guarantee about half of the outstanding mortgages in the United States.
Why the conflict? Because the Federal Housing Finance Agency, which oversees the two entities, "doesn’t see itself as an arm of the administration."
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This is another stupid deal that has the heavy hand of the government in business. If they just quit all of the stupid harsh new regulations the rest of us could refinance. Oh wait, I remember.. common sense makes no sense when the government wants to get a huge "settlement" most of which will wind up in campaign coffers or as gifts to friends of those in the cabinet and congress.