FDIC Considering New Disclosure Requirements for Banks

By Kyle Chezum Updated on 1/11/2011

1/11/11

Banks that sell second lien mortgages to investors as mortgage backed securities may have to disclose a specific plan of what will take place if the primary mortgages connected to these second liens enter into default.  There is widespread belief that many mortgage modification requests have been rejected by banks and loan servicers due to the negative consequences such modifications would have upon second mortgages, many of which are owned by other large institutions.

Transparency may help resolve this issue and incentivize banks and other mortgage servicing companies to provide more mortgage modifications.

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