On March 28, Fannie Mae issued Servicing Guide Announcement SVC-2014-05 regarding standard and streamlined modification updates, as well as servicing notices pertaining to mortgage loan reporting and allowable foreclosure attorney fees.
Announcement SVC-2014-05: Fannie Mae Standard Modification and Streamlined Modification Updates
In this Announcement, Fannie Mae is updating the modification terms for mortgage loans with pre-modified mark-to-market LTV ratios less than 80%. It supersedes and replaces SVC-2013-28, Fannie Mae Standard Modification and Streamlined Modification Updates, in its entirety. This Announcement also updates requirements related to the Evaluation Notice, solicitation letter, and Trial Period Plan.
Servicing Notice: Late or Inaccurate Mortgage Loan Reporting
This Notice announces that effective May 1, 2014, Fannie Mae will begin issuing warning letters to and assessing compensatory fees on servicers that submit late or inaccurate reports.
Servicing Notice: Updates to Allowable Attorney Foreclosure Fees
This Notice announces that Fannie Mae is updating the maximum allowable foreclosure attorney fees for mortgage loans secured by properties in the state of New York. The Allowable Attorney and Trustee Foreclosure Fees exhibit on Fannie Mae's business portal reflects these changes and corrects an error in the footnote annotations for certain states.
Banks Pushing Court Foreclosures Means More Inventory
Lenders are increasingly using the courts to foreclose on delinquent homeowners in states where it's not required to reduce the risk of falling afoul of new protections.
In the first quarter, banks filed 2,348 court notices in nonjudicial states, which don't require court involvement, according to data compiled by Irvine, Calif.-based mortgage data provider RealtyTrac Inc. That compares with only seven notices in the first quarter of 2013. The shift to the courts comes after laws were passed in states such as California and Hawaii that give consumers new tools to fight foreclosure, said RealtyTrac Vice President Daren Blomquist.
"Going through the judicial process now protects lenders," said Thomas Lawler, a housing consultant and former chief economist at Fannie Mae. "Even though it takes longer, all sorts of eyes starting with the judge's will reduce the likelihood of mistakes and potential liability under new foreclosure laws."
The courts are emerging as an alternative way for lenders to move the remaining shadow inventory of foreclosed homes to the market. Banks have almost 500,000 homes in foreclosure that haven't been sold, according to Blomquist. About 10% of these "limbo" properties are listed for sale, and more than half are occupied by a former homeowner or tenant, RealtyTrac estimates.