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Friday, March 11, 2011


David Pereira

This is an interesting analysis. In the base contract you have a borrower and a lender which has inherent good faith and fair dealing components to it. This "arms-length" 1:1 relationship is clearly understood. If I have an issue, I can merely call the lender. Over time, this progressed to loans being sold in which your loan got sold to someone else and when you have an issue, you merely call the new lender that brought your loan. Securitization has eliminated this inherent good faith and fair dealing component in that you can no longer address these issues 1:1. The net result is this modern servicer between the lender and borrower model has broken down communication and the evidence shows that the borrower no longer has a good faith and fair dealing element. Sadly, the courts are unwilling to recognize good faith and fair dealing in most real estate loans therefore the consumer is screwed again.

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