{"id":5900,"date":"2008-12-02T12:46:38","date_gmt":"2008-12-02T19:46:38","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=5900"},"modified":"2008-12-07T10:46:50","modified_gmt":"2008-12-07T17:46:50","slug":"investor-sues-to-block-mortgage-modifications","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5900\/investor-sues-to-block-mortgage-modifications\/","title":{"rendered":"Investor\u00a0Sues to Block Mortgage Modifications"},"content":{"rendered":"

The battle over the mass modifications of troubled mortgages has begun in earnest. On Dec. 1, William Frey, a private investor in mortgage-backed securities, filed a lawsuit in New York State Supreme Court alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal.<\/em><\/p>\n

Investor Sues to Block Mortgage Modifications – Yahoo! News<\/a>.<\/em><\/p>\n

At first glance, you\u2019re probably thinking what I was (well, maybe not\u2026) but seriously, why would some mean hearted investor want to prevent Bank of America from helping 400,000 home owners stay in their homes?<\/p>\n

Let me attempt to explain:<\/p>\n

    \n
  1. Countrywide wrote the loans and sold them on the secondary market.<\/li>\n
  2. When they sold them, they didn\u2019t sell them in 1 piece, they sold sections (called tranches) to a multitude of different investors and investment companies.\u00a0\u00a0 It\u2019s actually possible that parts of one mortgage end up being owned by 30 different \u201cparties.\u201d<\/li>\n
  3. The parties who bought these loans bought them as contracts that had a prepayment risk but didn\u2019t buy them with a modification risk.<\/li>\n
  4. When a loan gets modified, it changes that contract which inherently changes the value of the investment.<\/li>\n
  5. The investors who are suing to stop it are saying that if you start changing the contracts, you are going to effectively ruin the secondary mortgage market because suddenly the value of the loans that are sold becomes an unknown.<\/li>\n
  6. If the secondary mortgage market dies, then the housing market dies.\u00a0\u00a0 It\u2019s just that simple, without mortgage money, the party is over.<\/li>\n<\/ol>\n

    Are the investors saying that the loans shouldn\u2019t be modified?\u00a0\u00a0 No they aren\u2019t.\u00a0\u00a0 What they are saying is, \u201cI didn\u2019t buy this investment with the thinking that it could be modified going forward.\u201d\u00a0\u00a0 So if you, Mr. B of A, want to change the terms, that\u2019s fine, buy it back and change the terms.<\/p>\n

    The investors are, it seems to me, hoping for one of two results:<\/p>\n

      \n
    1. That Bank of America will buy the loans back (with our help of course).<\/li>\n
    2. That they take their chances with foreclosures.\u00a0 Given the report that the National Association of Realtors issued earlier on Mortgage Modification Defaul Rates<\/a> of 50%, that\u2019s not Read more<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

      The battle over the mass modifications of troubled mortgages has begun in earnest. On Dec. 1, William Frey, a private investor in mortgage-backed securities, filed a lawsuit in New York State Supreme Court alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal. Investor Sues […]<\/p>\n","protected":false},"author":44,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[273,263],"class_list":{"0":"post-5900","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"tag-mortgage-modifications","8":"tag-tom-vanderwell","10":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1855,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1855\/the-new-york-times-goes-on-a-countrywide-manhunt\/","url_meta":{"origin":5900,"position":0},"title":"The New York Times goes on a Countrywide manhunt","author":"Greg Swann","date":"August 25, 2007","format":false,"excerpt":"The New York Times on the Countrywide mess and how the company got there:ON its way to becoming the nation\u2019s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. \u201cI want to be sure you\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1810,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1810\/the-countrywide-federal-bailout-act-of-2008\/","url_meta":{"origin":5900,"position":1},"title":"The Countrywide Federal Bailout Act of 2008","author":"Brian Brady","date":"August 15, 2007","format":false,"excerpt":"Have you ever felt your stomach drop? I received an e-mail, from reader Robert Kerr today, asking if I had seen Merrill Lynch's downgrade of Countrywide Financial. Merrill Lynch believes that Countrywide might face bankruptcy. Make no mistake about it, a collapse of Countrywide Financial will give everybody in the\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4858,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4858\/will-mortgage-brokers-be-the-hope-for-homeowners\/","url_meta":{"origin":5900,"position":2},"title":"Will Mortgage Brokers Be the Hope For Homeowners?","author":"Brian Brady","date":"October 8, 2008","format":false,"excerpt":"The FHA Hope For Homeowners program was designed for existing homeowners, struggling with mortgage payments and an \"upside-down\" equity position in their primary residence.\u00a0 It is a new program with lots of misinformation.\u00a0 Some believe it can only be offered by existing loan servicers, some think only participating lender\/servicers can\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1534,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1534\/subprime-bookies-may-end-up-like-the-ending-of-the-last-sopranos-episode\/","url_meta":{"origin":5900,"position":3},"title":"Subprime “Bookies” May End Up Like The Ending of The Last Sopranos’ Episode","author":"Brian Brady","date":"June 13, 2007","format":false,"excerpt":"I wrote a tongue-in-cheek post about the subprime loans' collapse about three months ago. I wanted to show the history of securitization of home loans and explain that many of these defaults may actually be \"buried\" in mortgage pools. I pontificated that the expected debacle from the collapse may not\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16038,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16038\/but-weve-got-to-have-some-regulation-how-else-are-insiders-going-to-get-their-mitts-onto-sweetheart-mortgage-deals\/","url_meta":{"origin":5900,"position":4},"title":"“But we’ve got to have some regulation!” How else are insiders going to get their mitts onto sweetheart mortgage deals?","author":"Greg Swann","date":"July 5, 2012","format":false,"excerpt":"Regulation is rent-seeking, Rotarian Socialist graft, and that's all it ever is. Who sold out the housing market? The regulators, of course. AP: Countrywide won influence with discounts. HousingWire: Investigation reveals Countrywide VIP program scope and influence. Bloomberg: Countrywide Used Loans For Favor With Fannie Mae, Report Says. I love\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":866,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/866\/hard-money-life-as-a-legal-loan-shark\/","url_meta":{"origin":5900,"position":5},"title":"HARD MONEY: Life as a Legal Loan Shark","author":"Brian Brady","date":"January 7, 2007","format":false,"excerpt":"Loan broking in the private mortgage marketplace can be the most rewarding sector of the lending. I have helped families who faced foreclosure due to unforeseen negative events. I've watched a businesswoman land a huge contract because she could access quick capital. I've beamed with pride as a property investor\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/5900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=5900"}],"version-history":[{"count":3,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/5900\/revisions"}],"predecessor-version":[{"id":5975,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/5900\/revisions\/5975"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=5900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=5900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=5900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}