Essay: A New Proposal for Loan Modifications
Yale Journal on Regulation, Vol. 26, No. 2, pp. 417-429, 2009
13 Pages Posted: 26 Oct 2011
Date Written: January 2009
We propose a new three-pronged plan to address the recent harmful flood of foreclosures. Our plan would address the major barriers that inhibit the ability of third-party servicers to modify mortgages the way portfolio lenders are now doing with greater success. The plan provides greater compensation for servicers to perform their duties, removes legal constraints that inhibit modification, and addresses critical second liens that often get in the way of effective mortgage modifications. Our plan has more modest costs than competing plans and is likely to be the most effective while still protecting the rights of investors in mortgage-backed securities.
Suggested Citation: Suggested Citation