RBS sees more servicer-imposed foreclosure moratoria coming
Mortgage-backed securitization analysts at the Royal Bank of Scotland expect more servicers to halt foreclosures on mortgages in default. While investigations are currently underway in 23 states and California, analysts expect more states to join the fray. The majority of foreclosure stoppage is currently servicer-imposed. However, more and more state attorneys general are looking to force foreclosure moratoria. "A week after GMAC’s announcement, attorneys general in California and Connecticut ordered GMAC to freeze all foreclosures within their states," write researchers Paul Jablansky, Desmond Macauley and Ying Wang. "The actions taken by California highlight the likelihood that deficiencies that exist in judicial state foreclosure filings also exist in non-judicial states." "Anecdotally, there are suggestions that most of, if not all, the large servicers are conducting internal investigations of foreclosure procedures," they add in a research note sent to clients Monday highlighting the uncertainties facing the non-agency mortgage bond market created by the robo-signer debacle. For RBS analysts the issue is simply based on procedural hand tying. Large servicers are equipped to handle large inflows of mortgage payments, not so much large amounts of delinquent loans. The analysts doubt that the timelines provided by some of the servicers to address the situation are completely accurate. "While we agree that new procedures can be implemented in a relatively short amount of time, such new procedures only fix the process for new filings," analysts said. "We don’t know how long it will take for servicers to check and correct the old filings." Write to Jacob Gaffney. The author holds no relevant investments.