Consider the case of the Baileys. Litton, a subsidiary of Goldman Sachs, services their loan, and Litton’s contract with investors has no clear language banning modifications. In fact, documents show that over 115 other mortgages [1] from the same investment pool have already been modified. representative of investors in the Baileys’ mortgage says only the servicer can decide when to modify loans. While he couldn’t comment on an individual case, Bank of New York Mellon spokesman Kevin Heine says it’s “misinformation” to say that investors make these decisions. nobody knows the exact extent to which servicers are passing blame on to investors. Some housing counselors estimate that 10 percent of the denials they see are attributed to investors; others say they see as many as 40 percent. Either way, tens of thousands of homeowners may be affected, their attempts to modify their mortgage wrongly denied.
The Treasury Department prior refusual to release the exact formula for the NPV model, bringing criticism from homeowner advocates and industry experts.
http://stopforeclosurefraud.com/2010/07/24/mortgage-servicers-playing-the-blame-game/
http://www.law.berkeley.edu/files/bclbe/Subprime_Securitization_Paper_John_Hunt_7.2010.pdf
http://www.propublica.org/article/the-secret-test-that-ensures-lenders-win-on-loan-mods-915
http://www.loansafe.org/when-denying-loan-modifications-mortgage-servicers-often-wrongly-blame-investors
http://www.makinghomeaffordable.gov/borrower-faqs.html
http://online.wsj.com/article/SB10001424052748704421304575383540017919202.html?mod=WSJ_hps_editorsPicks_1
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