So, we have a Pit Bull in the fight against BofA. She has secured multiple settlements already on behalf of investors in MBS. As I have discussed many times, yes, we have an issue with homeowners not paying their mortgage, fraudclosure issues, loan modification scams etc but, the absolute biggest issue is the buy back issues.
Every one must be clear, if the Servicers, who own only the servicing rights, are found to have modified, serviced etc in error or negligently it is not necessarily the homeowner that is the damaged party. You see, there is no law the requires the Servicer to do anything but take your money, charge you late fees and foreclose if you don’t pay. No where in the contract between the Servicer and the Borrower does it require it but, in the Pooling and Servicing agreements there is contractual language between the Servicer and the Trust that owns the cashflows from the Notes that lays out what they should and should not do. This is where the rubber meets the road.
Take some time to read the article. It is a good one on what to expect as these lawsuits begin to proliferate.