News & Analysis as of

Borrowers Loan Modifications

Sheppard Mullin Richter & Hampton LLP

Ninth Circuit Holds Loan Modification Made By Unlicensed Lender Violates State Usury Law

In an April 16 unpublished opinion, the U.S. Ninth Circuit Court of Appeals affirmed the Bankruptcy Appellate Panel’s earlier decision finding that a mortgage lender not licensed in California violated the state’s usury law...more

Ballard Spahr LLP

Department of Veterans Affairs Enacts Sweeping Loss Mitigation Program Changes

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The Department of Veterans Affairs (VA) made significant changes to its loss mitigation program this month, launching its awaited Veterans Affairs Servicing Purchase Program, and implementing a 40-year loan modification term....more

Cadwalader, Wickersham & Taft LLP

We Can Work It Out: The Need for Pre-Negotiation Agreements

In light of the current economic climate, real estate lenders and borrowers will certainly be communicating with one another frequently concerning potential loan modifications and accommodations. It is prudent for lenders to...more

Perkins Coie

California Supreme Court Rules No Tort Duty of Care Required by Lenders When Considering Borrowers’ Loan Modification Requests

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The Supreme Court of California handed down a big win to mortgage lenders and servicers on March 7, 2022, when it issued a decision in Sheen v. Wells Fargo Bank, National Association et al., No. S258019, 2022 WL 664722, at *1...more

Blank Rome LLP

California’s Highest Court Confirms Lenders Owe No Duty to Borrowers to Process, Review, and Respond to Loan Modification...

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Financial institutions, lenders, and servicers should take note that the California Supreme Court affirmed a Court of Appeal decision confirming there is no duty for a lender to “process, review and respond carefully and...more

Patton Sullivan Brodehl LLP

Loan Modifications and Losing Lien Priority

Modifying a loan can sometimes cause a loss of lien priority. It all depends on the facts underlying the modification, and even the original loan....more

Butler Snow LLP

FFIEC Issues New Guidance on Loan Accommodations Related to COVID-19

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At the onset of the pandemic, many financial institutions offered credit accommodations, such as short-term deferrals and other loan modifications, to borrowers in response to the significant adverse impact caused by...more

King & Spalding

Commercial Mortgage Loan Repurchase Agreements: COVID-19 Related Issues, Temporary Agreements and What May Come Next

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The abrupt halt in commercial activity caused by the 2019 Novel Coronavirus (“COVID-19”) has had a significant impact on the global economy, and in particular, the commercial real estate market. As a result, the commercial...more

Ballard Spahr LLP

FFIEC Issues Joint Statement on Additional Loan Accommodations Related to COVID-19

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On August 3, 2020, the Federal Financial Institutions Examination Council (“FFIEC”) issued a joint statement to provide prudent risk management and consumer protection principles for financial institutions to consider when...more

Greenbaum, Rowe, Smith & Davis LLP

The Clock Is Ticking Towards the End of LIBOR; What Borrowers Can Do Now to Mitigate the Risks

Since the end of 2017, we have been talking about the discontinuation of LIBOR as a reference rate for borrowers who finance with floating rate loans.  The December 2021 end date is fast approaching, but much work remains to...more

Akerman LLP

Regulatory Guidance for Banks, Lenders, and Licensed Mortgage Originators Regarding Coronavirus (UPDATED)

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(New information added on April 17, 2020) - As the coronavirus crisis unfolds, federal and state financial services regulatory agencies have taken multiple actions impacting banks, non-bank financial service providers, and...more

Cadwalader, Wickersham & Taft LLP

COVID-19 Update: Revisiting Pre-Negotiation Agreements in the Era of Covid-19

While the ramifications of the Covid-19 pandemic for real estate lenders and borrowers will unfold over time, at this point we know that lenders and borrowers will be communicating frequently and extensively regarding...more

Burr & Forman

Financial Regulators Update Previous Statement on Loan Modifications and Reporting Pursuant to CARES Act

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On April 7, 2020, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer...more

Maynard Nexsen

Need a Loan Modification? ASK! - Guidance on the CARES Act and Banking

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The Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act” along with recent guidance from bank regulators have increased the flexibility banks can offer to borrowers and created new opportunities for lending....more

Patton Sullivan Brodehl LLP

Can a Loan Modification Waive the Borrower’s Right of Reinstatement?

Loans secured by a deed of trust typically provide that upon default (commonly, missed interest payments) the lender may elect to “accelerate” the loan, making the entire balance of principal and interest due....more

McGlinchey Stafford

Top 11 Tips for Lenders Navigating Commercial Loan Modifications in Response to the COVID-19 Outbreak

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Managing Borrower Expectations - In the immediate term, most Lenders are considering modifications that offer (usually on request only and subject to normal underwriting and credit review) a 60–90 day deferral of payments...more

Seyfarth Shaw LLP

Loan Document Covenant Concerns and Operational Issues in the Age of COVID-19

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As the nation engages in social distancing and takes other steps to attempt to slow the spread of COVID-19, players in the commercial real estate space are considering what impacts the virus will have on their business and...more

Locke Lord LLP

California Court of Appeal Rejects Tort Duty in Reviewing Borrower for a Loan Modification, Highlighting Split Among Intermediate...

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On August 5, 2019, the California Court of Appeal for the Second District held that a lender owes no “tort duty of care during a loan modification negotiation.” Sheen v. Wells Fargo Bank, N.A., ___ Cal.Rptr.3d ___, 2019 WL...more

Bradley Arant Boult Cummings LLP

Mortgage-Loan Modification Scam Ends with Serious Consequences

A California man that operated as a high-level sales executive for a fraudulent residential mortgage-loan modification scheme will now spend several years in jail. From 2009 to 2016, Mehdi Moarefian (aka Michael Miller)...more

Ervin Cohen & Jessup LLP

Careful Who You Trust. A Lender Can Be Liable For The Negligence And Misrepresentations Of Its Loan Servicers, Even Absent Any...

In the recent case of Daniels v. Select Portfolio Serving, Inc., the California Court of Appeal has held that a lender may be liable for the negligence and misrepresentations of the lender’s servicer, without any contractual...more

MoFo Reenforcement

FHFA Announces Home Modification Program

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On April 14, 2016, the Federal Housing Finance Agency (“FHFA”) announced the launch of a principal reduction program for first-lien mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac. According to the...more

Dorsey & Whitney LLP

FASB’s Current Expected Credit Loss Proposal - Capital Recapture Considerations for Loan Documents

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This eUpdate addresses a concern regarding the impact on bank capital of the FASB’s “Proposed Accounting Standards Update, Financial Instruments—Credit Losses (Subtopic 825-15)” (the “Proposal”), should it be adopted. ...more

Baker Donelson

New Case Poses Threat to Mortgage Servicers in Bankruptcies

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A new decision from the U.S. Court of Appeals for the Ninth Circuit poses a serious threat to mortgage companies that service mortgages of chapter 13 debtors. Mortgage servicers should be aware of the case's implications and...more

Carlton Fields

CFPB Reports Continued Mortgage Servicing and Other Violations of Consumer Financial Law

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In its Supervisory Highlights released earlier this summer, the CFPB reported its examination observations in consumer reporting, debt collection, mortgage origination and servicing, fair lending, and student loan servicing....more

Hinshaw & Culbertson LLP

Borrower Who Obtains A Preliminary Injunction Is Entitled To A Fee Award

In Monterossa v. Superior Court (PNC Bank), 2015 DJDAR 6488, the California Court of Appeal for the Third District decided a case of first impression under Code of Civil Procedure Section 2924.12(i) enacted in 2012. The...more

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