Court Order Loan Modifications Extend Mortgage Relief to Homeowners

In the letter, bank industry insiders warned that court-ordered loan modifications would trigger more losses at Fannie Mae and Freddie Mac, which own or guarantee more than $5 trillion of U.S. mortgages. Those losses would flow through to the U.S. government because it has agreed to pump money into the firms to keep them solvent. Mortgage industry lobbyists also argued that mortgage servicers would likely shun federally insured FHA home loans because, despite Mr. Conyers’ changes, the legislation doesn’t protect such home loans from being crammed down by the courts. Several GOP amendments to limit the scope of the bill failed, including language to require borrowers to complete credit counseling before receiving court-ordered mortgage modification plans.