Fannie, Freddie Trash Requirement That Homeowners Sign Away Their Rights To Sue In Order To Obtain Loan Modifications

The Washington Independent reports:

• [C]onsumer groups and Rep. Barney Frank (D-Mass), the chairman of the House Financial Services Committee, were not aware that the waivers [requiring homeowners to sign away their rights to sue, in order to get their loan payments restructured on more affordable terms by Fannie Mae and Freddie Mac] were included in the loan modification agreements until after TWI’s story ran on Jan. 15. The story was brought to Frank’s attention during an on-camera interview with Talking Points Memo reporter Elana Schor.

• “I did not know until you just told me that Fannie and Freddie were [requiring mortgage holders to sign waivers],” Frank said in the interview. “And I can pretty much guarantee you that we will have put an end to that within a few days.

• Since then, the waivers have been eliminated, said Brad German, a spokesman for Freddie Mac. Fannie Mae spokesperson Amy Bonitatibus also confirmed the waivers have been removed. New sample modification agreements - without the waivers - were posted on Freddie Mac’s website during the last week of January, German said. Both Fannie and Freddie use the same agreements.

For more, see Borrowers to Keep Legal Rights Under Foreclosure Plan (Fannie, Freddie Requirement That Forced Mortgage Holders to Sign Legal Waivers Eliminated).