What's that you say Bank of America and JPM, "it's all contained?" Hey Fed, it's not too late to add $8 trillion in MBS to QE2. On the other hand, now we know what QE3 will be buying.
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 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 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. 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, 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.
h/t Econotwist
I am torn between my sympathy for those who are about to lose their homes through foreclosure and the injury I see to the rule of rule and the economy itself in the way foreclosure proceedings are being challenged and processed. People are angry with the banks and for good reason, but it is important to distinguish the granting of mortgages from what was done with them once granted. The banks may have been complicit in approving bad loans, but the borrowers must accept some responsibility.
In all fairness, besides discovering that they could not meet the payments, defaults have occurred for a number of other reasons: the value of real estate has dropped; homeowners have lost their jobs or their income has been reduced; balloon payments could not be met; or other unanticipated circumstances have occurred. I watch with some misgivings the army of lawyers lining up to defend foreclosure proceedings, some by taking large fees or second mortgages on the very houses being foreclosed. (NY Times 11/62010 -Taking on a Second Mortgage to Pay the Foreclosure Lawyer)
The media is full of revelations about the robo-signing of documents supporting foreclosures, and the practice is subject to numerous investigations and hearings. I have watched the video-taped depositions of bank employees admitting to verifying defaults with absolutely no personal knowledge of the facts. Of course, sworn testimony before a court must be truthful, but we have to be careful in deciding what renders it untruthful. It would be virtually impossible in any bank (even in those in which the mortgage remained with the issuing bank) for one person to know how much was loaned and precisely when and how much was paid on account. In this day and age, all of that information comes via computer printouts -- not personal knowledge. So verifying that a mortgage is in default and the amount due is never based upon personal knowledge, but rather a search of the records and reliance on those records kept in the ordinary course of business.
Foreclosure proceedings are not criminal in nature, in which a defendant can sit back, do nothing, and require the government to prove its case. These are civil proceedings and the borrowers and hopefully their lawyers know whether or not the mortgage is in default. To oppose the foreclosure, when both the borrower and lawyer know the mortgage is in substantial default, to my mind borders on the unethical. If indeed there are valid defenses to foreclosure -- mortgages not in default, wrong property designated, etc. instances which I suspect are very rare, they should be pursued with diligence.
On the other hand, the holder of the mortgage must prove ownership, and that information is solely in the hands of the banks and their assignees. That is not information a borrower would have, and the borrower (defendant) has an absolute right to know that a suit for foreclosure is being conducted by the current holder of the mortgage. That is a defense made in good faith and worthy of pursuit. I have reservations about the good faith of challenging the existence of a default with full knowledge that it exists, but none about insisting on proof of current ownership and the right to foreclose.
Despite my sympathy for all those who may lose or have lost their homes, I am concerned with the stability of contracts, the rule of law, if they are abandoned at this fragile time in our economy. Any and all assistance possible, such as modifications, should be afforded borrowers so that they can remain in their homes, but failing that, our legal system and, in turn, our economy, cannot be jeopardized by excusing persons from performing under their written agreements when they know that they are in default. The person who buys a TV on time, but is aware that she or he is in default, should not be able to keep the TV and not make any further payments just because evidence of the debt and default comes from a computer rather than personal knowledge.
Even defending foreclosure proceedings for the purpose of delay might seem like a laudable and noble goal, but the reality is that by doing so we are not retaliating against those mean banks that got us into this, but the shareholders, some of whom are homeowners themselves, who invested in these gift-wrapped mortgage packages only to find when opened -- that they were worthless junk. Let us do everything we can to aid those in danger of losing their homes through foreclosure, but let us not sacrifice the rule of law and the sanctity of contracts in the process.
bench_craft_company
New Dragon Age 2 character unveiled <b>News</b> - Page 1 | Eurogamer.net
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Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
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New Dragon Age 2 character unveiled <b>News</b> - Page 1 | Eurogamer.net
Read our news of New Dragon Age 2 character unveiled.
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Last Look: Style <b>News</b> You Might Have Missed (PHOTOS, POLL)
Welcome to Last Look, where we round up the Style scraps that didn't make it to our news page this week. Click through and catch up on what else happened since Monday!
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What's that you say Bank of America and JPM, "it's all contained?" Hey Fed, it's not too late to add $8 trillion in MBS to QE2. On the other hand, now we know what QE3 will be buying.
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 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 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. 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, 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.
h/t Econotwist
I am torn between my sympathy for those who are about to lose their homes through foreclosure and the injury I see to the rule of rule and the economy itself in the way foreclosure proceedings are being challenged and processed. People are angry with the banks and for good reason, but it is important to distinguish the granting of mortgages from what was done with them once granted. The banks may have been complicit in approving bad loans, but the borrowers must accept some responsibility.
In all fairness, besides discovering that they could not meet the payments, defaults have occurred for a number of other reasons: the value of real estate has dropped; homeowners have lost their jobs or their income has been reduced; balloon payments could not be met; or other unanticipated circumstances have occurred. I watch with some misgivings the army of lawyers lining up to defend foreclosure proceedings, some by taking large fees or second mortgages on the very houses being foreclosed. (NY Times 11/62010 -Taking on a Second Mortgage to Pay the Foreclosure Lawyer)
The media is full of revelations about the robo-signing of documents supporting foreclosures, and the practice is subject to numerous investigations and hearings. I have watched the video-taped depositions of bank employees admitting to verifying defaults with absolutely no personal knowledge of the facts. Of course, sworn testimony before a court must be truthful, but we have to be careful in deciding what renders it untruthful. It would be virtually impossible in any bank (even in those in which the mortgage remained with the issuing bank) for one person to know how much was loaned and precisely when and how much was paid on account. In this day and age, all of that information comes via computer printouts -- not personal knowledge. So verifying that a mortgage is in default and the amount due is never based upon personal knowledge, but rather a search of the records and reliance on those records kept in the ordinary course of business.
Foreclosure proceedings are not criminal in nature, in which a defendant can sit back, do nothing, and require the government to prove its case. These are civil proceedings and the borrowers and hopefully their lawyers know whether or not the mortgage is in default. To oppose the foreclosure, when both the borrower and lawyer know the mortgage is in substantial default, to my mind borders on the unethical. If indeed there are valid defenses to foreclosure -- mortgages not in default, wrong property designated, etc. instances which I suspect are very rare, they should be pursued with diligence.
On the other hand, the holder of the mortgage must prove ownership, and that information is solely in the hands of the banks and their assignees. That is not information a borrower would have, and the borrower (defendant) has an absolute right to know that a suit for foreclosure is being conducted by the current holder of the mortgage. That is a defense made in good faith and worthy of pursuit. I have reservations about the good faith of challenging the existence of a default with full knowledge that it exists, but none about insisting on proof of current ownership and the right to foreclose.
Despite my sympathy for all those who may lose or have lost their homes, I am concerned with the stability of contracts, the rule of law, if they are abandoned at this fragile time in our economy. Any and all assistance possible, such as modifications, should be afforded borrowers so that they can remain in their homes, but failing that, our legal system and, in turn, our economy, cannot be jeopardized by excusing persons from performing under their written agreements when they know that they are in default. The person who buys a TV on time, but is aware that she or he is in default, should not be able to keep the TV and not make any further payments just because evidence of the debt and default comes from a computer rather than personal knowledge.
Even defending foreclosure proceedings for the purpose of delay might seem like a laudable and noble goal, but the reality is that by doing so we are not retaliating against those mean banks that got us into this, but the shareholders, some of whom are homeowners themselves, who invested in these gift-wrapped mortgage packages only to find when opened -- that they were worthless junk. Let us do everything we can to aid those in danger of losing their homes through foreclosure, but let us not sacrifice the rule of law and the sanctity of contracts in the process.
bench_craft_company
New Dragon Age 2 character unveiled <b>News</b> - Page 1 | Eurogamer.net
Read our news of New Dragon Age 2 character unveiled.
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Last Look: Style <b>News</b> You Might Have Missed (PHOTOS, POLL)
Welcome to Last Look, where we round up the Style scraps that didn't make it to our news page this week. Click through and catch up on what else happened since Monday!
bench_craft_company
New Dragon Age 2 character unveiled <b>News</b> - Page 1 | Eurogamer.net
Read our news of New Dragon Age 2 character unveiled.
Can Mobile Phones Think?: Tech <b>News</b> «
Nokia's Beta Labs today released a new experimental application called Situations, and it portends a future where context awareness drives the mobile experience, and points to a time when our handsets will do the thinking on our behalf, ...
Last Look: Style <b>News</b> You Might Have Missed (PHOTOS, POLL)
Welcome to Last Look, where we round up the Style scraps that didn't make it to our news page this week. Click through and catch up on what else happened since Monday!
bench_craft_company
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