Report: Servicers' Claims That Investors Owning Delinquent Mortgages Won't Allow Loan Modifications A Bunch Of BS

ProPublica reports:

• Arthur and Alberta Bailey are about to lose their home near New Orleans, and their mortgage company says one thing stands in the way of relief: The investors who own their mortgage won’t allow any modifications.

• It’s a story heard again and again across the country as desperate homeowners try to participate in a federal program created to foster loan modifications and prevent foreclosures. Loan servicers say their hands are tied by Wall Street. Federal officials, bank officers, housing counselors and investors themselves say that excuse is cited far more often than is justified. In fact, they say, few mortgage deals include such restrictions.

• Consider the case of the Baileys. Litton, a subsidiary of Goldman Sachs, services their loan, and Litton’s contract with investors has no clear language banning modifications. In fact, documents show that over 115 other mortgages from the same investment pool have already been modified.

For more, see When Denying Loan Mods, Loan Servicers Often Wrongly Blame Investors.

In a related ProPublica story, see Resources for Investigating Investor Restrictions on Mortgage Modifications.