Research from 12th Street Capital pointed out that the new program for homeowner affordability ensures that first and second lien holders are treated fairly and consistent with priority of liens.

However, the servicer¬ís classification of these modifications and the exact language in the related securitization's governing documents will have a great effect on who will suffer the shortfalls caused by the modifications.    Rate reductions will have the double effect of reducing the net wac cap, causing net wac cap shortfalls that are not covered by most monoline policies that wrap many of these second lien transactions. They will also reduce any excess interest and lower the chances of any deal restoring OC or paying back monolines for prior period draws and for covering losses,etc.

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