Mortgage servicers seem to be caught between a rock and hard place when it comes to foreclosures: their legal practices are being scrutinized by state attorneys general for sloppy paperwork while the GSEs pile on fees for delays in loss mitigation work.
According to Interactive Mortgage Advisors (IMA), Denver, penalties for late processing times on foreclosures “are now being implemented by the GSEs at the behest of [the Federal Housing Finance Agency (FHFA)] for lack of performing loss mitigation in a timely fashion.”
IMA estimates that the penalty is $30 per day per loan – which can add up quickly.
The vendor, which is offering solutions to help servicers with their processing times, said one of its clients “with an exceptionally clean record” was recently fined in excess of $500,000 by one of the GSEs.
“We know of another whose penalties are in excess of $1 million,” said IMA in an email about the issue.
According to the GSEs, the fees began in the spring – under the direction of the FHFA.
Both Fannie and Freddie have provided their servicers with state-by-state grids on how long it should take to foreclosure on a delinquent mortgagor.
The timelines, however, can vary greatly from state to state.