Fannie Mae has announced in an August 31, 2010 Bulletin, that it will start fining loan servicers who take too long to complete routine foreclosures. If a servicer does not monitor the trustee/attorney conducting the foreclosure and make sure they comply with the time frame established by Fannie Mae then the servicer could receive a fine based upon: “Fee calculated based on the outstanding principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay, and any additional costs that are directly attributable to the delay.” (Fannie Mae Announcement SVC-2010-12).
Ouch, it looks like they are not messing around anymore. Only time will tell how big of an impact this has on the current number of foreclosures and the subsequent REO properties for sale, but both could dramatically spike in the near future if servicers become concerned about fines and move properties out of their “Shadow Inventory”.
What time frame has been set for a Utah foreclosure? 150 days (approximately 5 months)
In Utah about the fastest you can possibly complete a non-judicial foreclosure is just outside of 4 months (if all the planets and stars align), and as such this will impose a burden on servicers and Trustees/attorneys to bring their A game when conducting a foreclosure.
Another interesting point that can be taken from the allowable timeline is to see where Utah compares to other states. While Utah does not have the shortest time frame of 60 days (Georgia, Michigan, Missouri, Tennessee, Texas, Virginia, & West Virginia) we are nowhere near the longest time frame of 420 days for New York (Downstate area)!
If you are wondering about the term “Shadow Inventory” used above, then tune in to next week’s blog when we will be explaning the term and giving our thoughts on the topic….