Paulson
Treasury Secretary Paulson’s plan to rescue subprime mortgages will be greeted with legal challenges by investors, lawyers predict.
The plan, announced last week, would stop rate increases on some subprime and adjustable rate mortgages. The holders of mortgage securities are anticipating revenue from those increases and may claim that the rate freezes are a breach of contract.
Because the plan is voluntary, legal experts say that the targets of investor lawsuits aren’t likely to be the federal government, which brokered the agreement no fax payday advance. More likely to be named as defendants are mortgage servicers — the companies which collect mortgage payments and decide when to foreclose. Many major banks have a mortgage servicing division.
“The only thing the government did was bring the parties together — the ones on the line would likely be the servicers,” a former general counsel to the Treasury Department, now a fellow at the American Enterprise Institute, Peter Wallison, said.