H.R. 5579 would remove an impediment to troubled debt restructuring on the part of holders of residential mortgage loans.
Detailed Summary
Emergency Mortgage Loan Modification Act of 2008 - Establishes a standard for loan modifications or workout plans for pools of certain residential mortgage loans.
States that the servicer of such pooled loans owes a duty to the securitization vehicle to maximize recovery of proceeds for the benefit of all investors and holders of beneficial interests in the pooled loans, in the aggregate, and not to any individual party or group of parties.
Deems the loan servicer to be acting on behalf of the securitization vehicle in the best interest of all such investors and holders if the servicer makes certain loss mitigation efforts for a loan in or facing payment default in the reasonable belief that the particular modification, workout plan, or other mitigation actions will maximize the net present value to be realized over that which would be realized through foreclosure.
Declares that, absent contractual provisions to the contrary, a servicer acting in a manner consistent with such duty shall not be liable to specified persons (including any person obligated pursuant to a derivatives instrument to make specified payments) for entering into a qualified loan modification or workout plan for loss mitigation purposes.
Defines "qualified loan modification or workout plan" as one that: (1) is scheduled to remain in place until the borrower sells or refinances the property, or for at least five years from the date of adoption of the plan, whichever is sooner; (2) does not provide for a repayment schedule that results in negative amortization at any time; and (3) does not require the borrower to pay additional points and fees.
States that, for purposes of a qualified loan modification or workout plan, negative amortization does not include capitalization of delinquent interest and arrearages.
Defines "securitization vehicle" as a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that: (1) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; and (2) holds such loans.
Status of the Legislation
Latest Major Action: 5/1/2008: Placed on the Union Calendar, Calendar No. 382.
Points in Favor
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Points Against
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Visitor Comments
Stephanie Anderson
For this bill, Congress should get companies such as MIZNA (loanmod.com) more involved because they are on the front lines of this housing crisis and MIZNA is doing an excellent job in dealing with loan modifications and all the issues that arise with them.
Jennifer Lutz
This type of legislation is a step in the right direction. I'm sure companies like MIZNA (loanmod.com) will benefit from these efforts. They guided me through the loan modification process.
Susan Williams
It is about time that the government is doing something about this mortgage crisis. I was able to educate myself about loan modifications at (www.modify.be)
They answered all the questions I had and pointed me in the right direction to get help.
bobby rocket
I used a company by the name of professional loan modifications. www.proloanmods.com they were able to do what 80 loan officers couldn't and got me a 6.5% fixed rate instead of the 11% arm I was on. I would recommend them to everyone.