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Washington
FFIEC releases loss mitigation guidance
WASHINGTON (8/7/09)--The Federal Financial Institutions Examination Council (FFIEC) on Thursday said that mortgage loan servicers “have an obligation to act in the best interests” of their clients and should not consider “the potential impact” of a loan modification on a first or subordinate lien mortgage. The FFIEC, which includes the National Credit Union Administration as well as other federal regulators, said that mortgage loan servicers should modify first lien mortgages or subordinate liens “when doing so would produce a greater anticipated recovery” to the lienholders “than not modifying the loan.” Failing to follow these standards “may be a breach of the servicer’s obligation” to their clients, the FFIEC statement warned. The joint agency release noted that it was a reiteration of guidance given in the past. Perhaps coincidentally, there has been a spate of negative attention to loan modification efforts by some of the nation’s mortgage lenders who critics charge could be doing more to help troubled mortgage holders avoid foreclosures on their homes.


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