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Industry groups are using Hope Now servicing data to fend off legislation that would shield servicers from investor lawsuits and give them a freer hand in making loan modifications to avoid foreclosures.
The legislation would provide a safe harbor and "embolden servicers to ramp loan modifications," said Rep. Paul Kanjorski, D-Pa. "Without fear of litigation, servicer efforts toward loss mitigation should also greatly increase."
But the Mortgage Bankers Association claims the mortgage industry and investor community has already made an "unprecedented" effort to prevent foreclosures.
"The willingness of stakeholders to address alternatives to foreclosures has resulted in 1.2 million repayment plans and loan modifications from July 2007 through February 2008," MBA vice chairman Robert Story said.
The American Securitization Forum also urged the lawmaker to be careful so they don't overrule securitization contracts, which could have a "chilling effect" on investor participation in the mortgage-backed securities market.
AFS committee chairman Ralph Daloisio noted that servicers are already engaged in expanded loan modification and loss mitigation efforts.
During the first two months of this year, "loan modifications represented 48% of all subprime workouts, which...