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Venable
February 20, 2009
This Alert reviews the announced framework of the Obama Administration’s “Homeowner Affordability and Stability Plan” (the “Plan”), further details of which will be announced on March 4, 2009. The Alert nicely boils down the Administration’s own summary documents (links below) to quickly deliver the keys points as to eligibility and incentives. The Alert notes that the Plan “is both aggressive and comprehensive” in its attempt to restore confidence and stability to the mortgage market with more than $75 billion dedicated to modify existing mortgage loans and between $50 billion and $900 billion earmarked to expand Fannie Mae’s and Freddie Mac’s portfolios. The Plan has features that are geared to incentivize (but not compel) borrowers, lenders, holders and servicers to modify existing mortgage loans and reduce foreclosures. There is no “cram-down” element in the Plan, which largely exerts influence where it can without compulsion (ie through Fannie Mae and Freddie Mac et al) although that clearly still lurks in the wings in the form of proposed Congressional legislation.

From the FinancialStability.gov site:

Homeowner Affordability and Stability Plan Executive Summary

Homeowner Affordability and Stability Plan Fact Sheet

Helping Homeowners Under the Homeowner Affordability and Stability Plan: Three Cases

Homeowner Affordability and Stability Plan Questions and Answers

Please see our Hot Topics for more on this subject.

Recent Developments in Residential Mortgage Loan Modification Programs

Cadwalader
December 18, 2008
This Alert reviews the currently evolving efforts to reduce mortgage payment defaults (and ensuing foreclosures) through loan modification and/or guarantee programs. The introduction notes that securitized loans can be tougher to modify than non-securitized loans given contractual obligations present in securitization servicing agreements and the divergent interests of junior and senior investors (senior investors more likely to be happy with foreclosures given where they stand in the pecking order and junior, ie more exposed, investors more likely to favor modifications).