I can understand the use of these provisions in severance agreements that concern the complicated relationship between employer and employee - but a non-disparagement requirement to obtain a mortgage loan modification?  Severance agreements concern a relationship that has ended - not an ongoing relationship like a mortgage loan.

Nonetheless it appears to be so - as reported by the Consumer Law & Policy Blog:

"Mortgage servicers increasingly are including non-disparagement clauses in loan modification agreements, including ordinary loan modifications (i.e., those that are not negotiated in settlement of litigation). In at least one instance, Ocwen, the largest non-bank servicer of mortgages in the U.S. thanks to a number of acquisitions in recent years, sought to impose a non-disparagement provision that would have prevented the homeowners from making "any derogatory and/or disparaging comments about Ocwen." (link)

 This is really happening:

"Mortgage payment collectors at companies including Ocwen, Bank of America Corp and PNC Financial Services Group are agreeing to ease the terms of borrowers' underwater mortgages, but they are increasingly demanding that homeowners promise not to insult them publicly, consumer lawyers say. In many cases, they are demanding that homeowners' lawyers agree to the same terms. Sometimes, they even require borrowers to agree not to sue them again

These clauses can hurt borrowers who later have problems with their mortgage collector by preventing them from complaining publicly about their difficulties or suing, lawyers said. If a collector, known as a servicer, makes an error, getting everything fixed can be a nightmare without litigation or public outcry." (link)

If these provisions had been standard practice before the mortgage crisis it would have severely hampered public advocacy around mortgage issues.  In addition, homeowners who sign these agreements may be barred from speaking out publicly about future servicing or other mortgage issues for the remaining life of the loan - which can be as long as forty years. 

There's a lot that a mortgage servicer can do wrong that is worth disparaging over that period of time.  This development is a real threat to the rights of American homeowners that needs to be addressed immediately.

BREAKING - Ocwen recently promised to halt this practice:

"Ocwen Financial (OCN) reached an agreement with the New York Department of Financial Services, saying that it would stop using gag orders on mortgage modifications.

"'In discussions with our Department, Ocwen has agreed to no longer seek gag rules as part of settlement agreements or loan modifications with borrowers,' Benjamin Lawsky, superintendent of Financial Services, said.

'Additionally, the company has stated it will not enforce gag rule provisions in existing agreements. We are gratified that Ocwen worked constructively with us to resolve this matter, and our Department intends to review this issue at other financial institutions,' Lawsky added."  (link)

That's a good start - but that still leaves at least Bank of America Corp and PNC Financial Services Group.