What Do Subprime Securitization Agreements Say About Mortgage Modification?

14 Pages Posted: 27 Mar 2009 Last revised: 6 Aug 2014

John P. Hunt

University of California, Davis - School of Law

Date Written: March 25, 2009

Abstract

A review of pooling and servicing agreements from large subprime securitization programs in 2006 reveals that about 10% of the contract ban loan modifications altogether. The other 90% do not seem to forbid win-win loan modifications (defined as modifications that benefit the borrower and increase the present value of cash flows to the trust), although their terms are open-ended enough that reluctance to make such modifications is understandable. If the subprime universe as a whole looks similar to the contracts we have reviewed to date, mass clarification of contracts rather than mass abrogation either through special legislation or through the creation of a special bankruptcy process may be appropriate.

Keywords: subprime, pooling and servicing agreements, loan modification, mortgage modification, Countrywide

JEL Classification: G20, G21, G28

Suggested Citation

Hunt, John P., What Do Subprime Securitization Agreements Say About Mortgage Modification? (March 25, 2009). Yale Journal on Regulation, Vol. 31, 2013. Available at SSRN: https://ssrn.com/abstract=1369286 or http://dx.doi.org/10.2139/ssrn.1369286

John P. Hunt (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States
(530) 752-5052 (Phone)

HOME PAGE: http://ratingagencylawblog.wordpress.com/

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