Follow up to previous Foreclosure post
*The following is an article previously included in the National Association of Realtors online newsletter and is not to be interpreted as being my own statements or thoughts but rather a re-print of previously printed material from another source.
In September and October 2010, several lenders suspended foreclosures in two dozen states due to questions about whether foreclosures were being processed consistent with applicable state law requirements. Concerns are being raised by state and federal elected officials, as well as consumer and fair housing groups, about the validity of ownership of mortgages that have been securitized and resold. At the center of the controversy is Mortgage Electronic Registration Systems (MERS). This firm is responsible for electronically tracking the transfer of assignment of mortgages. Class-action suits are being brought against MERS alleging that the use of the system circumvents state laws.
On October 1, 2010, Fannie Mae and Freddie Mac released statements regarding servicer compliance with foreclosure processing of Fannie and Freddie loans. In the releases, both organizations reiterated that servicers must comply with applicable state laws governing foreclosures. Although nearly all of the foreclosures in question are expected to be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. NAR members are reporting that upcoming sales have been delayed indefinitely or cancelled, to the detriment of all involved. Additionally, homes on the market without clear title will make sales much more difficult. While banking executives focus their attention on this problem, it is possible that servicers may be somewhat more receptive to approving loan modifications and short sales, since they avoid the foreclosure procedural problems altogether.
Official Fannie Mae statement:
"We are disturbed by reports of servicers failing to follow proper procedures in the administration of foreclosure cases. We strongly believe that homeowners who have exhausted all other options and are now facing foreclosure must be treated fairly and equitably. Accordingly, servicers should adhere to the exact requirements of the law in all of these cases, including the proper execution of affidavits, verifications and other legal documents as part of the default process.
Fannie Mae servicers are required, by contract, to adhere to applicable laws and rules regarding mortgage documents, and to establish processes and controls that ensure compliance. The steps we are taking today in coordination with our regulator are meant to reinforce these contractual obligations, strengthen the regimen for review and due diligence on the part of servicers, and protect the rights of borrowers facing foreclosure."
In September and October 2010, several lenders suspended foreclosures in two dozen states due to questions about whether foreclosures were being processed consistent with applicable state law requirements. Concerns are being raised by state and federal elected officials, as well as consumer and fair housing groups, about the validity of ownership of mortgages that have been securitized and resold. At the center of the controversy is Mortgage Electronic Registration Systems (MERS). This firm is responsible for electronically tracking the transfer of assignment of mortgages. Class-action suits are being brought against MERS alleging that the use of the system circumvents state laws.
On October 1, 2010, Fannie Mae and Freddie Mac released statements regarding servicer compliance with foreclosure processing of Fannie and Freddie loans. In the releases, both organizations reiterated that servicers must comply with applicable state laws governing foreclosures. Although nearly all of the foreclosures in question are expected to be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. NAR members are reporting that upcoming sales have been delayed indefinitely or cancelled, to the detriment of all involved. Additionally, homes on the market without clear title will make sales much more difficult. While banking executives focus their attention on this problem, it is possible that servicers may be somewhat more receptive to approving loan modifications and short sales, since they avoid the foreclosure procedural problems altogether.
Official Fannie Mae statement:
"We are disturbed by reports of servicers failing to follow proper procedures in the administration of foreclosure cases. We strongly believe that homeowners who have exhausted all other options and are now facing foreclosure must be treated fairly and equitably. Accordingly, servicers should adhere to the exact requirements of the law in all of these cases, including the proper execution of affidavits, verifications and other legal documents as part of the default process.
Fannie Mae servicers are required, by contract, to adhere to applicable laws and rules regarding mortgage documents, and to establish processes and controls that ensure compliance. The steps we are taking today in coordination with our regulator are meant to reinforce these contractual obligations, strengthen the regimen for review and due diligence on the part of servicers, and protect the rights of borrowers facing foreclosure."
