Realty Check

White House Doesn’t Mention Key Piece Of Mortgage Legislation

President Barack Obama
Photo by: Pete Souza

Things got a little curious yesterday, as I prepared to report on the President signing the Helping Families Save Their Homes Actinto law.

As I already blogged, the act includes a “safe harbor” provision for servicers. Until now, word on the street was that servicers were slow to offer meaningful loan modifications because they were afraid of being sued by the investors who own the loans. This new law gives them a kind of “Get out of Jail Free” card.

So why was there no mention at all in the White House press release on the bill signing? The release went on for several pages, detailing the expansion of FDIC capabilities and increased consumer protections, easing of FHA restrictions on the Hope for Homeowners program and even providing new resources for homeless Americans. No safe harbor.

Well immediately I thought, maybe it was stripped out of the bill at the last minute and I missed it?? So we all scrambled, and I sent an email over to the White House asking for clarification. I sent it about 40 minutes before the signing and said I needed an answer fast because I had to go on with the report during the signing. Hearing nothing, we contacted Sen. Chris Dodd’s office, who spearheaded much of the legislation, and they assured us the safe harbor provision was in there. So I went ahead and reported it.

I later got an answer from the White House, that yes, in fact, the safe harbor provision was in the newly signed law but no reason as to why it was omitted from the release. I realize this was a very controversial provision, fought against by investors and finally agreed to as something of a substitute for the failed bankruptcy cramdown that was just too tough for some to stomach. The safe harbor, fair or unfair (that’s your call) will, I believe, make it easier for modifications to happen by removing the liability roadblock. I’m guessing nobody in the White House wants to shout “safe harbor!” for anyone in the mortgage industry right now, but if this helps the Administration’s modification program, isn’t it worth a mention?

Questions?  Comments?