Friday, October 24, 2008

Hope Now Meets Da Boss

Buried toward the back of the New York Times is an article that some people in Washington and especially some from Wall Street are going to find a bit uncomfortable.

It deals with a warning from some hedge funds who are prepared to take action against servicers that are participating in renegotiating loans without their permission.

William Frey of Greenwich Financial is quoted: “Any investor in mortgage-backed securities has the right to insist that their contract be enforced.”

Frey reportedly said he was aware of two other funds in addition to his and Braddock Financial that sent similar letters to lenders.

David Myers of Braddock Financial trotted out the industry-standard warning about how credit would dry up, saying "...if mortgage servicing firms did not strictly follow those contracts, it would delay the recovery of the credit market because investors would be less willing to buy securities in the future."

And as this kind of thing continues to leak out, maybe someone will wake up and see that Hope Now is mostly window dressing intended to get troubled borrowers to contact their servicer and jump on the fast train to foreclosure.

The Honorable Judge Roy Bean

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