Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco has directed Fannie Mae and Freddie Mac to implement a four-point policy framework detailing the agency's plan for handling foreclosure process deficiencies.
‘This framework envisions an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, lenders, investors and communities alike,’ DeMarco says, adding that the framework was developed in close consultation with the Obama administration and other federal regulators.
The four-point plan involves verifying processes and procedures; remediating deficiencies, if identified; reporting any foreclosure processing situation involving possible fraudulent activity; and avoiding delay.
The FHFA breaks down its guidance of the second step – remediating actual problems – into four categories: pre-judgment foreclosure actions, post-judgement foreclosure actions prior to foreclosure sale, post-foreclosure sale and bankruptcy cases.
In some cases, servicers that have identified deficiencies may have to file a motion or seek an order to substitute properly prepared affidavits with courts. In other instances, servicers may be required to ensure that title insurance is available to purchasers of real estate owned properties (REOs).
The American Land Title Association (ALTA) says the FHFA's framework will assist the land title industry to continue insuring REOs.
"Title insurers are looking to lenders to provide appropriate indemnities," says Kurt Pfotenhauer, ALTA's CEO. "We will continue to work with federal and state regulators, Fannie Mae, Freddie Mac and lenders to bring certainty to the marketplace, and we will continue to offer the title industry's perspective on this issue."