Reports Of Hedge Fund Threats Against Loan Servicers Making Loan Modifications Outrage Lawmakers

In Washington, D.C., Politico reports:

• Barney Frank is not happy with hedge funds. Specifically, he and other top House Democrats are “outraged” that some hedge funds are telling mortgage service companies not to modify distressed mortgages with the help of the government program Frank helped craft.

• The New York Times reports that at least two hedge funds told servicers they might take action against them if the servicers participated in the government program to help homeowners avoid foreclosure. The program, which became law in July, just took effect at the beginning of October.

• Frank (D-Mass.) and four other Democratic members of his Financial Services Committee wrote an angry letter to the CEOs of the hedge fund companies named in the article, Braddock Financial Corporation and Greenwich Financial Services. The lawmakers wrote that they “strongly urge” the companies to reverse their position on the modification issue and informed each CEO that they’re scheduling a Nov. 12 hearing at which both will be asked to testify.

For more, see Frank threatens financial industry, calls hearing.

See also:

• House Financial Services Committee press release: Lawmakers Demand Hedge Funds Drop Opposition to Foreclosure Prevention,
• Letter to Braddock Financial Corporation,
• Letter to Greenwich Financial Services,
• Letter to Managed Funds Association.