Federal Financial Institutions Examination Council
|For Immediate Release||August 6, 2009|
FFIEC Support for Responsible Loss Mitigation Activities
The Federal Financial Institutions Examination Council (FFIEC) members today issued the following statement on Support for Responsible Loss Mitigation Activities. The statement reiterates the FFIEC members' continued support for responsible loss mitigation activities designed to preserve homeownership. This support extends to programs designed to achieve sustainable mortgage obligations regardless of lien position.
Support for Responsible Loss Mitigation Activities
The Federal Financial Institutions Examination Council members recognize that entities servicing first and subordinate liens on the same residential real estate property may be faced with potential conflicts of interest when making loan modification decisions. A servicer's decision to modify the first lien mortgage should not be influenced by the potential impact of the modification on the subordinate lien loan and vice versa. Any ownership interest in the subordinate lien cannot be a consideration. Consequently, the members offer these reminders:
This statement is consistent with the statement issued by the federal financial institutions regulatory agencies in April 2007, and the statement issued by the federal financial institutions regulatory agencies in conjunction with the Conference of State Bank Supervisors in September 2007 that encouraged owners and servicers, respectively, to modify residential mortgage loans to avoid unnecessary foreclosure.
1The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions. The Council has six voting members: the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Office of Thrift Supervision, and the State Liaison Committee (comprised of five representatives of state agencies that supervise financial institutions).