Bill Aims to Make Loan Modifications Easier

Sen. Arlen Specter, R-Pa., has introduced a bill that would make it harder for investors to sue servicers for loan modifications and it would temporarily amend pooling and service agreements so at least 25% of underlying loans in mortgage-backed securities could be modified. "The bill addresses the litigation threat by requiring investors' attorneys to conduct a careful inquiry into the factual and legal basis of their claims, including consideration of the recent statutory clarification that the servicer's duty is to the entire pool of investors," Sen. Specter said. In addition, the attorneys would have to get an opinion from a newly created Treasury Department office of foreclosure evaluation that the modification was "unreasonable or not permitted" under the Real Estate Mortgage Investment Conduit regulations. Sen. Specter indicated at a Judiciary Committee hearing that he wants to pass legislation before the end of year to increase loan modifications.