And now we have SunTrust and HSBC
by CHARLENE PERRY | 2011/03/03 |
Yesterday I read that HSBC was suspending all of it's foreclosures nationwide as a result in deficiencies in their foreclosure process and then today, I read this:
An internal review by SunTrust Banks, Inc. has uncovered problems with the paperwork in thousands of foreclosure cases, according to the Atlanta-based company's annual regulatory filing with the Securities and Exchange Commission.
"We recently conducted an assessment of our foreclosure process in all states," SunTrust explained in the report. "Our review indicated approximately 4,000 files...contained documents with technical issues in the foreclosure complaint verification, affidavit preparation, and notary processes."
SunTrust says the number of files with problems represents just under 15 percent of the company's active foreclosure proceedings and according to the company's statement, no deficiency identified violated the law.
SunTrust says it plans to replace any documentation that was not prepared properly in pending foreclosure actions that have not yet been decided. The company says this process of resubmitting affidavits "will be substantially completed during the first quarter of 2011."
Similar scenarios have played out among all the major mortgage servicers. Federal regulators have indicated even though very few, if any, homes were wrongfully foreclosed upon because of breakdowns in foreclosure processes, at least 14 servicers will face fines and be required to implement remedial actions and processing controls to atone for their part in the robo-signing scandal that swept the nation last fall.
In addition to the up-front costs associated with fines the company may be hit with, SunTrust says its ability to mitigate losses on defaulted loans will be impacted by delays in foreclosure proceedings due to case reviews and refiling of affidavits as a result of "our practices or failures to adhere to our policies," the company said.
"Any delay in the foreclosure process will adversely affect us by increasing our expenses related to carrying such assets, such as taxes, insurance, and other carrying costs, and exposes us to losses as a result of potential additional declines in the value of such collateral," SunTrust explained.
"While we cannot predict the ultimate impact of any delay in foreclosure sales, or any issues that may arise as a result of alleged irregularities with respect to previously completed foreclosure activities, we may be subject to additional borrower and non-borrower litigation and governmental and regulatory scrutiny related to our past and current foreclosure activities," SunTrust said in the regulatory filing. "This scrutiny may extend beyond our pending foreclosure matters to issues arising out of alleged irregularities with respect to previously completed foreclosure activities."
The company added, "We expect that our costs will increase modestly in 2011 as a result of the additional resources necessary to perform the foreclosure process assessment, revise affidavit filings, and make any other operational changes. In addition, process changes required as a result of our assessment could increase our default servicing costs over the longer term.
I have been reviewing titles all morning and took a break to check e-mail and found this little tidbit.
I found this particularly frustrating in that of the 10 titles I reviewed, 3 of them had "liars affidavits" in the foreclosure file, 1 of them had the foreclosure dismissed and refiled altogether and the other 6 were just a hot mess of issues in the chain.
Here in Maryland there are two firms who were caught filing affidavits signed by others (robo-signed). The attorneys admitted that they had not necessarily utilized "best practices", apologized and basically said they would try harder to do it right from now on. They begged the court's indulgence, were allowed to file "corrective affidavits" and the foreclosures proceeded.
Were the people in default? Probably. Did they legitimately foreclose upon these people? Probably. Did they take short cuts so that their bottom line was not affected? ABSOLUTELY.
But, really, what frustrates me more than anything is that these same firms are still being given a MASSIVE amount of work from Fannie, Freddie and others. They have been tasked with handling the files from "cradle to grave" and they are making a bucket-full of money doing it. Oversight of their process is nil to non--existent until the &^%$ hits the fan and they get caught. Then when they admit to mistakes they are given a free pass while those of us who are trying to offer good title to our clients are left to clean up their mess. I've almost come to the point where is see NO POINT in reviewing a title. I figure if I can get a letter of indemnity from Fidlity, First American, Stewart or Old Republic I'm covered.
Why should I bother to even check these titles? Why don't we all just say what the hell it's gonna be insurable no matter what, save ourselves some time and money and move on with our day?
Of course we don't have that luxury and most of us would lose sleep over the fact that we "passed" bad title to a client. And, too, should a title claim be filed, we are going to have to defend it in some way, even if we had absolutely nothing to do with the shoddy work done by others.
From my read of this article it seems that, in accordance with filing requirements, SunTrust is saying "hey investors we're just letting you know there's probably gonna be a hit we have to take as a result of these errors, so be prepared to lose some money." So, at least the investors are forewarned of a potential loss. Still...