The Federal Deposit Insurance Corp. said in a report yesterday that many mortgage servicers have "lax foreclosure documentation, ineffective controls over foreclosure procedures, and deficient loss mitigation procedures and controls,” the TheStreet.com reported today. The FDIC added that many players are failing to commit the necessary resources to handle "the rapidly growing volume of mortgage loans in default or at risk of default." The deficiencies in foreclosure procedures highlighted by the FDIC included "inadequate organization and staffing" of loan servicing staffs, the signing and notarization of documents by staff members who did not review the materials, and the failure to "conform to state legal requirements." Examiners also found that with sloppy recordkeeping, the large servicers were "undercharging fees as frequently as overcharging them." Click here to read the FDIC's report.
In related news, Michael Cembalest, CIO of JPMorgan Chase, said in a research note on Tuesday that U.S. agencies played an even larger role in the housing crisis than originally suspected. "What emerges from new research is something quite different: government agencies now look to have guaranteed, originated or underwritten 60 percent of all 'non-traditional' mortgages, which totaled $4.6 trillion in June 2008," Cembalest said in a research note on Tuesday. "What's more, this research asserts that housing policies instituted in the early 1990s were explicitly designed to require U.S. agencies to make much riskier loans, with the ultimate goal of pushing private sector banks to adopt the same standards." Click here to read Cembalest's note.
Mansfield Law Office