GSEs Issue Process Review Directives to Loan Servicers

FYI: Fannie and Freddie have issued policy review directives to their seller/servicers on following proper procedure in the foreclosure process. </p

While I don’t see these bulletins as anything besides another wake up call for back shop operations managers and servicing staff, we can’t forget the PR mess this is becoming for Fannie, Freddie and the FHFA. The GSEs want/need this issue squashed as quickly and cleanly as possible so they can move on with the disposition of their REO inventory. In the end, homeowners agreed to pay their mortgage, if they didn’t pay their mortgage, they should be foreclosed on (whether or not consumers feel like a bank “screwed” them is not the point. Sorry for the bluntness but this is the plain and simple view in the here and now.)</p

Unfortunately this won’t do much to speed up foreclosure turn times. This debacle will only further slow the pace of the housing recovery as banks delay foreclosures and potential new buyers put off purchasing plans until legal are worked out and more clarity surrounds the outlook for home prices (some clarity is better than none).</p

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FROM FANNIE MAE’S LENDER LETTER:</p

Issues have recently arisen with respect to potential defects with affidavits submitted by servicers in support of motions for summary judgment in states with judicial foreclosure processes. The issues pertain to whether the individuals executing the affidavits on behalf of the servicer had the required personal knowledge of the information contained in the affidavits and whether the affidavits were notarized in accordance with applicable requirements.</p

Fannie Mae is directing all of its servicers to immediately undertake a review of their policies and procedures relating to the execution of affidavits, verifications, and other legal documents in connection with the default process. If the servicer has any concerns with its policies and procedures or their implementation, the servicer must advise its legal counsel to contact Fannie Mae in writing immediately via e-mail to nonroutine_litigation@fanniemae.com.</p

Fannie Mae is also taking this opportunity to emphasize the application of existing Mortgage Selling and Servicing Contract (the Contract) and Servicing Guide provisions with regard to the following:</p<ul