Saturday, December 18, 2010

Cutting the Gordian Knot? - The Securitized Mortgage Bond Holder's Committee

One notion that I have run across recently is the notion of the appointment of a "mortgage bond holder's committee" under state law to represent the interests of the securitized interests in the mortgage back securities - as opposed to the interests of the mortgage servicer. Florida Statutes 69.021 specifically provides for the appointment of such a committee by the Court to represent the interests of a bond holder and the like. This statute provide that in a foreclosure action on a mortgage lien given to secure the issuance of bonds or obligations, the Court may appoint a committee to protect the "holders of bonds or units or certificate of beneficial interest."

As has been noted in the Congressional hearings, the interest of the mortgage servicer may not be in synch with the economic interests of the holders of the securitized interests in the mortgage. This may be an avenue to address the issue of the mortgage servicer arguably acting as an "empty creditor" as such concept is discussed in the works of legal scholars such as Professor Huh.

The appointment of a bond holders committee may bring to the negotiating table the actual party that bears the truer economic interest in the mortgage in distinction to the mortgage servicer whose economic interest is much narrower and possibly adverse to the holders of the mortgage back securities.

Tuesday, December 14, 2010

HAMP has "Failed to Make a Dent in the Foreclosure Crisis"


Today the Congressional Oversight Panel issued its oversight report of over 170 pages reviewing the Department of Treasury's Foreclosure Prevention Programs. The report reviews where HAMP stands today, reviews the future of HAMP, and sets forth conclusions and recommendations. Annex I to the report reviews lessons from the Home Owners' Loan Corporation of the 1930s and 1940s. The report states that despite the tweeking of HAMP since its April 2010 report, the concerns with the program have not been resolved. The report states that it presently estimates that HAMP will "prevent only 700,000 to 800,000 foreclosures - far fewer than the 3 to 4 million foreclosures that Treasury initially aimed to stop, and vastly fewer than the 8 to 13 million foreclosures expected by 2012." It further notes that since "Treasury's authority to restructure HAMP ended on October 3, 2010, the program's prospects are unlikely to improve substantially in the future." The report concludes that HAMP has failed to "make a dent in the foreclosure crisis" and that Treasury has "failed to acknowledge HAMP's shortcomings in time."

Thursday, December 2, 2010

Yet More Congressional Hearings on Foreclosure Crisis

The House Committee on the Judiciary held a hearing on "Foreclosed Justice: Causes and Effects of the Foreclosure Crisis" today. Yesterday, the Senate Banking Committee held hearings on the foreclosure crisis. Further hearings are scheduled for December 8, 2010.

Among the speakers were officials from

Among the issues addressed were:standing to foreclose, "Robo-signing", MERS, and projected future foreclosures. Rep. John Conyers (D-Mich.) stated some project that up to 13 million more homes will be lost to foreclosure before the crisis is over.

Wednesday, December 1, 2010

Senate Hearing on "Problems in Mortgage Servicing - Part II"

The Senate Committee on Banking, Housing, and Urban Affairs will be holding a hearing on "Problems in Mortgage Servicing from Modification to Foreclosure, Part II" today.

The witnesses include representatives from

In 2007, Professor Eggert wrote on article entitled "Limiting Abuse and Opportunism by Mortgage Servicers"