Fannie, Freddie Requirement That Forced Mortgage Holders to Sign Legal Waivers Eliminated
Now that Treasury Secretary Timothy Geithner has unveiled his bank rescue plan, the Obama administration says it will turn next to setting up a fast-track way to stop the foreclosure crisis with national standards for loan modifications. The new standards - which will expand on a program launched by the government late last year - won’t be announced for a week or two. But one thing appears settled: They aren’t going to require borrowers to give up some of their legal rights in order to qualify for a loan modification.
Waivers requiring homeowners to sign away their rights to sue, in order to get their loan payments restructured on more affordable terms, were included in a streamlined loan modification program started by mortgage giants Fannie Mae and Freddie Mac in December. TWI first reported that the waivers were part of the agreements, buried in a long list of requirements for a modification. These waivers could mean that borrowers would have to give up all legal claims related to their mortgage, not just to the loan modification, even in cases where the borrowers were victims of predatory lenders.
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