SNR Denton on Helping Families Save Their Home Act of 2009

SNR Denton on Helping Families Save Their Home Act of 2009

 

The Helping Families Save Their Homes Act of 2009, 111 P.L. 22, which was signed into law in May 2009, contains sweeping changes that affect the mortgage lending industry. In this Commentary, Stephen Ornstein, Matthew Yoon and John Holahan of SNR Denton discuss the Act and its implications for servicers and others in the mortgage industry. They write:
 
     The Act amends existing Section 129A of TILA [Truth-in-Lending Act] to provide residential mortgage loan servicers with a safe harbor from liability in connection with loan modifications without regard to existing pooling and servicing agreements (PSAs). The existing Section 129A of TILA created a fiduciary duty for servicers to investors, but carefully carved-out instances in which different duties were created in PSAs. The Act now amends Section 129A of TILA and provides that notwithstanding any other provision of law, whenever a servicer of residential mortgages agrees to enter into a qualified loss mitigation plan with respect to 1 or more residential mortgages originated before the date of enactment of the Act, including mortgages held in securitization or other investment vehicles:
 
1.        To the extent the servicer owes a duty to investors or other parties to maximize the net present value of the mortgages, the duty will be construed to apply to all investors and parties, and not to any individual party or group of parties; . . . .
 
     . . . .
 
     The Act also amends Section 131 of TILA by adding an important and controversial new disclosure requirement. In addition to the numerous other disclosures required by TILA, no later than 30 days after the date on which a mortgage loan is sold or otherwise transferred to a third party, the creditor  that is the new owner or assignee of the mortgage must notify the borrower in writing of the following:
 
1.        The identity, address, telephone number of the new creditor;
 
2.        The date of transfer;
 
3.        How to reach an agent or party having authority to act on behalf of the new creditor;
 
4.        The location of the place where transfer of ownership of the debt is recorded; and
 
5.        Any other relevant information regarding the new creditor.
 
(footnoted omitted)