They can act as a risk buffer because of the extensive financial resources they have at their disposal; these comprise, among others, the clearing members’ collateral, a clearing fund, obligations to make further contributions under additional margin calls, and the CCPs’ own funds.
For example, high percentages of the pre-HAMP modifications provided no payment relief to borrowers and, not surprisingly, then exhibited high re-default rates. Servicers may not be doing everything they can do to ensure that loss mitigation activities, including HAMP and non-HAMP modifications, are responsible and sustainable and subject to strong internal controls.