Methinks Thou Dost Protest Too Much
That’s what our boy Willie said a while ago, and today we need to think about this in the context of servicers ramming down Amerikans all across this country.
Despite all the light and happy press releases from the banks about keeping Amerikans in their homes, it ain’t their dog in the fight….in many cases…..The banks could care less.
It’s that Fannie and her boyfriend, Freddie that really matter. Here’s a few choice words from Fannie:
As provided in the Servicing Guide, servicers service Fannie Mae mortgage loans as
independent contractors, not as agents, assignees, or representatives of Fannie Mae. The
servicer needs to maintain the discretion to apply appropriate judgment in dealing with
borrowers and loans on a case-by-case basis, consistent with Fannie Mae’s servicing policies.
Issues have recently arisen with respect to potential defects with affidavits submitted by
servicers in support of motions for summary judgment in states with judicial foreclosure
processes. The issues pertain to whether the individuals executing the affidavits on behalf of the
servicer had the required personal knowledge of the information contained in the affidavits and
whether the affidavits were notarized in accordance with applicable requirements. (Whoopsie, the banks ain’t been following the law….)
But here’s where it really gets good……
Agreement to Indemnify and Hold Harmless
As stated in the Contract, the lender will indemnify Fannie Mae and hold Fannie Mae harmless
against all losses, damages, judgments, or legal expenses that result from its failure in any way
to perform its services and duties in connection with servicing mortgage loans or managing or
disposing of property according to this Contract or the Guides.
If any private entity or governmental agency sues Fannie Mae, makes a claim against Fannie
Mae, or starts a proceeding against Fannie Mae based on the lender’s acts or omissions in
servicing mortgage loans or managing or disposing of property, the lender’s obligation to
indemnify and hold Fannie Mae harmless must be met regardless of whether the suit, claim, or
proceeding has merit.
But this one is the absolute best…..
If Fannie Mae believes that the servicer is failing to comply with Fannie Mae’s servicing
requirements, Fannie Mae may pursue a variety of remedies, either to correct a specific
problem or to improve the servicer’s overall performance. One possible remedy is the imposition
of a compensatory fee to compensate Fannie Mae for damages and to emphasize the
importance Fannie Mae places on a particular aspect of the servicer’s performance. Sometimes,
a compensatory fee will relate to the action the servicer took or failed to take for a specific
mortgage. At other times, the compensatory fee may relate to the effect that the servicer’s
deficiencies may have on Fannie Mae’s cash flow.
Fannie Mae may charge a compensatory fee to provide the servicer a financial incentive to
correct its servicing problems and improve the quality of its performance.