Thank you to everyone who joined the May 12 Briefing and contributed questions throughout the session. We wanted to share responses to two additional attendee questions below.

When or why should a servicer or counsel reach out to the investor leading up to a mediation hearing?

Typically, a servicer has the authority to negotiate and settle on behalf of the investor. However, there are times when a particular investor has restrictions on what a servicer may or may not do on a loan – which ultimately prevents a borrower from modifying/settling. In those cases, servicers and counsel must reach out to investors to see if there is the possibility to waive any of those restrictions. As such, needing investor input typically arises when a servicer is limited on what they can do due to a restriction placed by the investor.

How do you handle mediators, and OC pushing for calculations from denials as servicer? We have been taught not to provide the calculations. This has been becoming more and more of an issue.

In New York, under CPLR 3408, if a borrower is denied for a modification, and seeks to know why, the servicer must provide a denial with details. These details include, but are not limited to, the waterfall calculations used to determine the eligibility of the borrower. At the outset, many judges and referees seek to know what modification programs are offered by servicers (i.e. term extension, interest rate adjustment, balloon payment, etc.) Due to this, the borrower and the court have an idea of what to expect for a potential modification review. The court does not view this to be privileged information. As such, in New York, servicers are required to provide calculations when directed to do so.

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