Outlook Negative for U.S. RMBS Servicer Sector
Fitch Ratings-New York-04 November 2010: Fitch Ratings has assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects FELONIES in the judicial foreclosure process.
‘Risks to servicers include cost to research and remediate any errors, additional fees and resources, potential penalties and reputational risk,’ said Diane Pendley, Managing Director and head of U.S. RMBS Operational Risk for Fitch.
This industry-wide issue will cause all servicers to be under increased scrutiny from a wide range of state and federal regulators, state attorneys general, and GSE’s. All servicers will be affected, even those fully in compliance with all foreclosure rules and regulations. This is due to the increased amount of time and manpower it will take to properly address the much higher level of oversight and inquiries that are received, as well as the anticipated additional court delays.
Fitch’s Rating Outlooks indicate the likely direction of any rating change over a one- to two-year period and may be Positive, Negative, Stable or, occasionally, Evolving.
Fitch has received responses to its recent survey from all of its rated servicers regarding the servicers’ specific internal procedures used to verify and execute foreclosure affidavits. All servicers have indicated that they are taking this matter seriously and have reviewed or are in the process of reviewing their internal procedures used to verify and execute foreclosure affidavits.
Approximately one-third of Fitch’s rated servicers have completed their reviews of foreclosure processes and the accuracy of their foreclosure affidavits.
These servicers do not believe they will need to take any corrective action or make any changes to their current processes at this time. Some servicers have estimated that they will be able to complete their review within the next several weeks, while others are still unable to give a specific estimate of how long it may take to complete their reviews.
However, ‘all servicers appear to be working towards quantifying and defining their position on foreclosures,’ said Pendley. Therefore, Fitch expects all servicers will have substantially completed their internal reviews by the end of the fourth quarter.
Based on the research that the servicers have completed to date on these issues, all servicers generally maintain the factual accuracy of their affidavits.
However, some have found their procedures for reviewing, signing and notarizing foreclosure documents may require changes and corrective actions. Some servicers have announced publicly that they have halted certain foreclosure and liquidation actions until their reviews are completed.
Many servicers have also stated that they will be resuming the foreclosure and liquidation actions in identified jurisdictions as they complete their reviews and determine that their processes are adequate and any needed corrective actions have been taken.
Fitch has requested its rated servicers to provide estimates on the volumes and timeframes for submitting corrected affidavits when it is found to be necessary and as this information becomes available. However, the servicer’s ability to resolve each corrective action FELONY at the local court level will create a wide variety of remedial steps and associated timeframes. ‘Final resolution of the foreclosure affidavit concerns and the multiple resulting investigations, along with assigned ownership rights prior to initiating foreclosure actions, may not occur until well into 2011 and possibly beyond,’ said Pendley.
Fitch has discussed with its rated servicers their ability to track and segregate the additional costs associated with taking any corrective actions.
If corrective actions are needed because of a servicer error, any increased costs should be borne by the servicers and not passed through to the trusts.
These increased costs may include legal costs to correct and file new or amended foreclosure documents and the increased carrying costs for the extended foreclosure and liquidation timelines.
Fitch may place an individual servicer’s ratings on Rating Watch Negative and/or downgrade the ratings if the servicer does not diligently and timely review its processes and take immediate corrective action to remediate any foreclosure action or documentation failures FELONIES. Fitch may take similar actions on a servicer’s ratings if the impact of the additional costs that must be borne by the servicer significantly affects its financial condition. Until those conclusions are reached, the Negative Outlook on the sector impacts all U.S. RMBS servicers.
An increase in loss severities on liquidated loans from expected trend lines or any downgrades to servicer ratings may result in negative rating actions on related RMBS classes. As a direct by-product of the recent foreclosure issues FELONIES, Fitch currently expects any negative rating actions on RMBS tranches to be limited largely to non-investment grade classes and tranches that currently have a Negative Rating Outlook. Additionally, Fitch does not envision RMBS downgrades to exceed a single rating category in most cases.
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Richard, you argue that the borrower is still in default on the debt, but to whom should the borrower have been paying? And do you believe the debt is now unsecured?
The problem for Diane and FITCH, is that I warned her and FITCH over a decade ago of these abuses and I have her and her team on TAPE and discussing how these were never “true sales,” but financing of receivables! Want this woman fired or in jail. She was part of the fraud and ignored it!!!!!
Paybacks are a FIATCH or is that FITCH?
@Richard F. Kessler: There are many crimes to investigate here starting with the origination of the mortgage loan , where this crime began, which is exactly what the media won’t discuss. Then there are the other matters that 4closurefraud pointed out on their website in The Market Ticker article from Oct. 24,2010 entitled The Market Ticker-Weekend Roundup: Foreclosuregate Status.This article states that in a very important radio interview on KOH, they clearly stated the assertion is made that the lenders and holders of the notes were paid in full. That is, they have no economic damage from the default (!) due to the way they structured the deals. and this is only point 1. see the article: https://4closurefraud.org/2010/10/24the-market-ticker-weekend-roundup-foreclosuregate-…Foreclosuregate is just the fraud to cover up the bigger fraud. Foreclosuregate is the only thing preventing the BANKSTERS from Armageddon. They are trying like hell to stop this from happening. Don’t think that is possible with more and more people defaulting everyday due to this shitty economy that Wall Street and the BAnksters created as part of their evil plan to collect on their crappy credit default swapinsurance through the crooks at AIG and then still steal our property. Nope, too many holes in this pirate ship.Just think about this: The more people who default the worse for the bankster crooks. Well with an economy destined for financial Armageddon due to what the BAnks/WAll Street thought was a brilliant plan to steal the rest of the wealth from the people(our property) they have shot themselves in the foot. The FED/The Government just keeps pumping more fake money into the system trying to plug the holes in the sinking pirate ship. It is all about to sink. The inflation of the market is causing the deflation of the dollar. Result: DOUBLE DIP RECESSION. Massive job loss, Massive unemployment means: MASSIVE DEFAULT ON PROPERTY MEANS: Zero default for the banks. The banks can’t collect any money. Therefore there scheme will have failed.Read todays article on 4closure fraud under recent posts entitled:The Market Ticker-America’s Alarm Clock Has Rung:Times Up
In reading your above information, I have questions that relate to the actual contracts called Deed of Trust and Note, there is named (one) Lender, only on the Deed of Trust. Then when the Lender sells the Note and/or deed of trust, that next corp or association, trust, what ever, becomes and investor, with normally a custodian of the Note, somewhere else. Now if you read the Deed of Trust only the Lender can appoint a successor Trustee with full powers of the original Trustee, there is no more lender, so the number 22, 23 or 24 usually on the Deed of Trust is where you find information on Successor Trustee and now the Grantor, Trustor, known normally as borrower, can now appoint the Successor Trustee, take a look at the contracts.
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The Trustee of the Trust for the Investors and the Prospectua, such as Chase, Wells Fargo, Bank of America, etc. has appointed a Trustee for the Deed of Trust, they have NO RIGHTS in the Deed of Trust in the Contract to do this appointment, so when the Trustee for the Prospectus, such as Chase, Wells Fargo, B of A. etc. these appointments are fraudulent.
And with all the information on MERS with case law, MERS is nothing more than a registorar and the national registration does not comply with the state laws on recording for real property which includes assignments. In Missouri the statutes state that anything that has to do with real property, like deeds, deeds of trust, assignments, easements etc have to be filed in the county where the real property is locates.
Not only has your investors been frauded in many ways so has the Grantor, Trustor, Borrower been frauded.
Comments please. AJ
I must be dreaming again. Everyone keeps addressing the question when and how can foreclosures go forward. No one seems the least bit concerned with wrongful foreclosures that have been adjudicated and the exposure to class actions seeking compensatory damages. I do not believe that toxic documents will result in the invalidation of mortgages except in a few cases which of course are well publicized. The fact is the borrower still is in default of the debt. If a crime has been committed through documentary fraud, leave it to public authorities to investigate, prosecute and convict. However there are also civil remedies for what may broadly be described as the umbrella of wrongful foreclosure and mortgage fraud. I believe this exposure to liability on the part of servicers and others is a ticking time bomb which will open the entrance to the treasure cave of wrongful foreclosure class action litigation.