Foreclosures For Sale, News, Articles And Foreclosure Information

The loan modification program implemented by Fannie Mae and Freddie Mac in December 2008 received nothing but good feedback. It was considered by most as a good step in helping distressed homeowners prevent foreclosure.

Fannie Mae and Freddie Mac temporarily stopped foreclosure eviction late last year in order to give way to the streamlining plan.

Through the loan modification program, foreclosure troubled borrowers who have missed a minimum of three payments can have their loan modified. Servicers would likewise benefit as they get $800 payment for every modification.

However, it is not known to many that a loan modification comes with a waiver of rights to sue. Under the waiver, a borrower is stripped of their right to initiate any legal claim against the lender if any problem related to mortgage and loan modification arises.

This requirement triggered negative reaction among concerned parties. They find the policy outrageous and say that it can be a source of abuse.

According to representatives of the two companies, the waiver is merely a customary legal language. It aims to look after the legal rights of Fannie Mae and Freddie Mac during the entire loan modification process. It permits the loan modifications to take effect without removing the companies of their rights to charge interest fees or other payments. Likewise, it protects them from possible litigation.

Housing advocates say otherwise. According to Julia Gordon, senior policy counsel for the Center for Responsible Lending, the waiver encompasses all requests and defenses regarding the mortgage and that would be unfair on the part of the borrower. She further said that if the two companies only have in mind the litigation with regards to the loan modification, they would have to revise the way the waiver was stated.

If the foreclosure crisis is really intended to be addressed, not only do the rights of mortgage companies be looked after. More importantly, the interest of the borrowers, the real stakeholders in the foreclosure situation, must be protected.