Mortgages Blog

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Refile faulty affidavits and move on. Proceed with foreclosures with as few delays as possible.

That's the word from the head of the government agency that oversees Fannie Mae and Freddie Mac. Edward DeMarco, acting director of the Federal Housing Finance Agency, wields more influence than anyone else over mortgages. In a statement issued this afternoon, DeMarco made clear that he thinks everyone loses if the foreclosure process bogs down unnecessarily.

Some delays are necessary, but DeMarco wants them to be as short as possible.

DeMarco issued a four-point policy framework that "envisions an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, lenders, investors, and communities alike."

FHFA is telling mortgage servicers to review their foreclosure processes. "In particular, when a servicer identifies shortcomings with foreclosure affidavits, whether due to affidavits signed without appropriate knowledge and review of the documents, or improperly notarized," the servicer should correct and refile the court documents.

Servicers should report fraudulent activity, DeMarco says. I'm not sure that the servicers will be eager to report themselves or the law firms that they hired, but one can hope.

Finally, DeMarco says, "In the absence of identified process problems, foreclosures on mortgages for which the borrower has stopped payment, and for which foreclosure alternatives have been unsuccessful, should proceed without delay. Delays in foreclosures add cost and other burdens for communities, investors, and taxpayers. ... Therefore, a servicer that has identified no deficiencies in its foreclosure processes should not postpone its foreclosure activities."

DeMarco's instructions to mortgage servicers comes out the same day that a coalition of all 50 state attorneys general announces that it will investigate whether servicers have broken laws when taking paperwork shortcuts. Who are the servicers more afraid of, and more eager to please: DeMarco, or the attorneys general. My guess is that they want to remain on DeMarco's good side.