Moody's servicer quality ratings for Litton Loan Servicing, Bayview Loan Servicing and MetLife Home Loans are being reviewed for possible downgrade following the discovery of ‘possible irregularities’ in the companies' foreclosure processes. The irregularities could result in delayed foreclosures, longer real estate owned timelines, as well as reputational risk and legal challenges to previously completed foreclosures, Moody's says.
On Oct. 8, Litton announced that it was halting some foreclosures while it completes a review of its procedures in the documentation review process.
Bayview, which has not publicly announced a foreclosure moratorium, is investigating the notarization of foreclosure documents but has not yet come to a conclusion. The servicer has informed Moody's that affidavits related to foreclosure matters were executed by a small number of senior individuals and were not part of an assembly-line process.
Employees at MetLife Home Loans, meanwhile, signed affidavits but did not have full personal knowledge of every item in the affidavit, Moody's explains. The servicer, which the rating agency reports has postponed foreclosure sales in some states, expects the refiling of affidavits, if necessary, to be complete by November.
Moody's reviews of the servicers will focus on the extent of the increase to foreclosure and REO timelines, the effectiveness of new procedures, the legal impact of the recent developments, and servicers' quality-control processes and oversight of foreclosure document execution.