According to Inman News, Fannie Mae will begin assessing fines on loan servicers who take too long to complete foreclosures, once it has been determined that the delinquent borrower is not qualified for a loan modification or a short sale as another alternative. The loan servicers will be assessed when they cannot provide a reasonable explanation for failing to meet the time lines for completing routine foreclosures , which vary from state to state, according to a bulletin to services from Fannie Mae. The foreclosure time lines established for the four states hit hardest by foreclosure during the downturn fall in between: 120 days in California and Arizona, 150 days in Nevada and 185 days in Florida. Fannie Mae said the foreclosure schedules it’s established for each state represent the time that is typically required for routine, uncontested foreclosure proceedings, given the legal requirements of the applicable jurisdiction. The timeline in Florida was extended by 35 days to allow for state-mandated mediation process.
According to the report, 4.99 percent of the roughly 9 million single-family loans securitized into mortgage-backed securities guaranteed by Fannie Mae were seriously delinquent or in the foreclosure process of of June 30, 2010 – about 450,000 loans. Of those, approximately 170,000 were in foreclosure. According to Lender Processing Services, an estimated 2.02 million homeowners were in foreclosure in July nationwide. Another 5.02 million homeowners were behind on their mortgages. On average, borrowers in foreclosure were 469 days behind on their mortgage paments, up from 351 days a year ago and 196 days in January 2009. About two-thirds of seriously delinquent loans had been delinquent for more than 180 days.
Properties that are vacant and held off the market, combined with whatever portion of homes with delinquent mortgages that are not currently listed for sale represent the “shadow inventory” which is putting downward pressure on both home prices and rents, Fannie Mae warned in the company’s most recent quarterly report to investors.