The Federal Financial Institutions Examination Council (FFIEC) is concerned about responsible loss mitigation activities and the preservation of homeownership. On August 6th, the FFIEC issued a statement which outlines the key duties and responsibilities of loan servicers in situations where there is a 1st and 2nd lien and the decision to modify might be influenced by a conflict of interest. The basic, but firmly worded, guidance indicates that decisions that are not anticipated to produce a greater recovery to investors given the alternatives may constitute a breach of that duty.
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