Comments on Consumer Rights Watch: Clinton, Obama, McCain On Foreclosure Crisis

Where's Ron Paul?

2008-04-28T14:11:00.000-05:00

Where's Ron Paul?

Create a standardized scoring system to quantify t...

2008-04-28T13:03:00.000-05:00

Create a standardized scoring system to quantify the borrower’s obligation.

I know he's busy campaigning, but it would be great if Obama could introduce this legislation right away. It's the kind of thing it would be easy for other senators to get behind and has the potential not only to pass, but to make a difference in the near future.

My commentary: You spent a lot more time listenin...

2008-04-28T11:23:00.000-05:00

My commentary: You spent a lot more time listening to Obama than you did the other candidates.

In fairness to Clinton, her proposal regarding mor...

2008-04-28T11:01:00.000-05:00

In fairness to Clinton, her proposal regarding mortgage servicers is probably directed at insulating the servicer from liability for deciding to offer a loan modification or refinance opportunity to distressed borrowers.

Right now, when a loan is securitized, servicers can be in a bind because pooling and servicing agreements require the servicer to maximize the investment return to the trust. Permanent modifications and refinances may not always be seen as maximizing trust income. So if a servicer decides to undertake modifications or refinances, it could open itself up to lawsuits from security holders, trustees, or others.

There are other reasons that this proposal isn't a good idea, but those are really concerned with how undermining contractual certainty could affect the larger credit markets. Strictly from a short-term consumer perspective, it's probably a good idea.