Moody’s Investors Service has separately placed some servicer ratings of Wells Fargo Bank and IndyMac Mortgage Servicers on review for possible downgrade, citing actions related to foreclosure affidavits.
The rating agency said its rating actions are specifically linked to Wells’ decision to submit supplemental affidavits for 55,000 foreclosures and IndyMac’s process of re-verifying affidavits for foreclosures.
The rating agency cited common concerns at IndyMac that have arisen in the recent so-called foreclosure crisis, namely that employees signing affidavits may not have had full personal knowledge of every item in the affidavits and notaries might not have been physically present at the time of signing.
Moody’s said in both cases that it is concerned about potential foreclosure process delays, as well as the possibility that potential irregularities in that process could result in legal challenges.
On Moody’s scale from 'SQ1' to 'SQ5' in which the former is considered strong and the latter is considered weak, Wells has an SQ1 rating as a primary servicer of prime or subprime residential mortgages. IndyMac has an 'SQ3' rating as a primary servicer of prime residential loans and 'SQ3-minus' ratings as a primary servicer of subprime residential mortgages and as a special servicer of residential loans.
Wells’ goal is to complete its submission of supplemental affidavits by mid-November, Moody’s noted.
Wells earlier this week identified instances where a final step in its processes relating to the execution of the affidavits — including some aspects of the notarization process—did not strictly adhere to required procedures.
In other foreclosure news, Fannie Mae, which has temporarily suspended certain REO sales because of the foreclosure-gate scandal, plans to hold its servicers responsible for increased carrying costs on these properties, industry sources told ASR sister publication National Mortgage News.
Moreover, the GSE has already come up with a loss estimate on what that cost might be: upwards of $150 million, said one REO manager close the situation.
As National Mortgage News went to press, a company spokeswoman had not returned two telephone calls about the matter.
"Over the past 45 days, there's been a lot of fall-out from this scandal," said a source close to Fannie. "When a property gets pulled off the market, that results in the carrying cost becoming greater. Lawns need to be cut and houses need to be cleaned. It can add up."
The low estimate on what Fannie might lose is $50 million, sources said.