FHFA urges GSE servicers to accelerate foreclosure process after reviews
Federal Housing Finance Agency Acting Director Edward DeMarco told government-sponsored enterprises in conservatorship to implement a policy detailing guidance on how to remedy foreclosure problems in mortgage servicing. On Oct. 1, DeMarco said Fannie Mae and Freddie Mac are working with their third-party servicers to identify any loans that may be have been foreclosed improperly. On Wednesday, FHFA urged servicers to proceed on foreclosures as quickly as possible after all foreclosure alternatives have been exhausted. "Delays in foreclosures add cost and other burdens for communities, investors, and taxpayers," according to the guidance. "For Enterprise loans, delay means that taxpayers must continue to support the Enterprises’ financing of mortgages without the benefit of payment and neighborhoods are left with more vacant properties." Bank of America (BAC), which services some Fannie loans, and other lenders including Ally Financial (GJM) and JPMorgan Chase (JPM) suspended foreclosures when employees signed foreclosure affidavits without a review or a notary present. One REO broker in Florida told HousingWire his sale of a Fannie Mae REO property was suspended by BofA with no further instructions given. According to the guidance, servicers of Fannie and Freddie loans must review processes and verify that all documents are comply with state law. If any problem is detected, servicers must work with the attorney to replace the documentation before proceeding with the judgment in pre-foreclosure cases and file appropriate motions to substitute the document. If the property is already in REO, then the servicer and attorney must ensure that the title insurance is available to the purchaser of the property. Wednesday, Terry Edwards, executive vice president of Fannie Mae said the guidance given by the FHFA reinforce directives Fannie issued last week that require servicers to review foreclosure processes. In developing the new guidance, the FHFA worked with the White House and other financial regulators, DeMarco said. "The country’s housing finance system remains fragile and I intend to maintain our focus on addressing this issue in a manner that is fair to delinquent households, but also fair to servicers, mortgage investors, neighborhoods and most of all, is in the best interest of taxpayers and housing markets," DeMarco said. Write to Jon Prior.