In a speech at the Economic Club of Washington on December 7, 2009, Federal Reserve Chairman Ben S. Bernanke addressed frequently asked questions on Federal Reserve:
1. What has the Federal Reserve been doing to support the economy and the financial system?
2. Will the Federal Reserve's actions lead to higher inflation?
3. How can we avoid a similar crisis in the future?
Bernanke stated improving conditions in housing, consumer expenditure, business investment and global economic activity, but tight credit conditions and a weak job market remain. The Federal Reserve purchased "unprecedented volumes" of mortgage-related securities and Treasury debt.
After Bernanke's speech, on December 8, 2009, the House Financial Services Committee held a hearing entitled "The Private Sector and Government Response to the Mortgage Foreclosure Crisis" to review the results of the federal government's actions in preventing additional mortgage foreclosures and encouraging existing loan modifications. Chairman Barney Frank (D-MA) opened the hearing with frustration of the Committee and the public with the federal government's failure to prevent mortgage foreclosures. Committee Member Ron Klein (D-FL) said the problem with the Making Home Affordable program was the lack of documentation. JPMorgan Chase offered over 560,000 modifications to struggling homeowners through November 30, 2009, and had approved or completed over 112,000 permanent modifications under the Making Home Affordable program. Bank of America had over 160,000 customers enrolled in a trial modification program and, combined with Bank of America's loan modification programs, over 615,000 homeowners modified their loans.
These loan modification concerns raise the issue whether a lender's failure to offer loan modification is privately actionable. California has a loan modification law under Civil Code 2923.6. A district court in Fresno in Nool v. Homeq Servicing, No. 1:09-CV-0885 OWW (E.D. Cal., Sept. 4, 2009), Judge Wanger held that "the language of section (b) belies the imposition of any duty to engage in loan modification discussions, as the provision merely expresses legislative 'intent' that the mortgagee, beneficiary, or authorized agent offer the borrower a loan modification if doing so is consistent with its authority." Another case agreeing with Judge Wanger is Farner v. Countrywide Home Loans, 2009 WL 189025, at *2 (S.D. Cal. Jan.26, 2009) ("[N]othing in Cal. Civ.Code ยง 2923.6 imposes a duty on servicers of loans to modify the terms of loans or creates a private right of action for borrowers.").
To listen to a bankruptcy audio on mortgage cram downs and strip downs (Teleconference recorded on Dec 13, 2009 with special guest: Leanne Levett, Esq, a foreclosure specialist in Florida), go to: http://www.713training.com/mortgagecramdown/
Real estate foreclosures and loan modifications involve complex issues that should be discussed with a skilled foreclosure attorney.
