Posted on Tuesday, December 14, 2010
Ratings agency Standard & Poor’s says mortgage servicers must provide documentation that their foreclosure processes are in compliance with foreclosure laws, or risk receiving a revised outlook or rating from the company.
Many mortgage servicers have been under scrutiny recently because of reports of “robo-signing.” Some of the largest servicers including Bank of America, GMAC, and JP Morgan Chase suspended foreclosures across the country to perform internal audits.
Bank of America recently announced it was resuming foreclosures in the 23 judicial states. After maintaining for months that no foreclosure suspension was necessary because its internal processes were sound, Citigroup announced in late November that it had found an estimated 14,000 affidavits that will need to be re-filed.
The New York-based research firm said it will not take ranking actions based solely on an announcement that a
servicer is reviewing its foreclosure processes, but expects all residential servicers in its Select Servicer program to provide certain documentation to prove their compliance with proper foreclosure affidavit rules and attestation of their procedures.
By the end of first quarter of 2011, servicers must provide:
• Written verification from an independent source that the servicer’s foreclosure affidavit preparation and attestation processes are sound and are designed to be in compliance with individual state laws governing the relevant processes.
• Written documentation, where applicable, of the servicer’s identification of process, workflow, and/or organizational deficiencies in its existing foreclosure affidavit preparation and attestation process. This documentation should also provide data on the extent of deficient documents identified and outstanding.
• Written verification, where applicable, of all relevant changes to internal policy documents that describe procedural changes, process improvements, workflow and organizational restructuring, etc., that are specifically relevant to and designed to remediate and support ongoing statutory compliance with the preparation of foreclosure affidavits and attestation.
Standard & Poor’s said in a statement to the press, “If we determine that, in our view, a servicer’s processes are inconsistent with the aforementioned requirements, we will monitor its efforts to remedy the issues and revise our outlook and/or rankings on the servicer as we deem appropriate.” .
DSNews By: Joy Leopold