Problems with Chase Home Finance’s foreclosure process has left its prime and nonprime servicer ratings on review for a possible downgrade.
The news came Wednesday from Moody’s Investors Service.
According to the New York-based ratings agency, the action was the result of recently discovered irregularities in Chase’s foreclosure process.
“Chase has stated that one or more of its employees had signed affidavits without having first-hand knowledge as to whether the facts stated in the document were accurate,” Moody’s stated. “According to Chase these affidavits were signed in the presence of a notary.
“The impact of these servicing irregularities on the validity of previous foreclosures remains uncertain.”
The servicer quality rating of JP Morgan Chase Bank, N.A., is also imperiled.
Chase’s primary servicer ratings for prime and subprime home loans, which currently stand at SQ1, face the potential downgrade. Based on Moody’s rating scale, the best possible servicer rating is an SQ1+, and the worst rating is SQ5-.
The servicer faces delayed foreclosures and longer REO timelines, the statement said. In addition, Chase could be forced to begin the foreclosure process again in some jurisdictions.
Moody’s used similar reasoning in its announcement Friday that GMAC Mortgage LLC’s ratings were being placed on review for a possible downgrade. GMAC has similar issues with its foreclosure process.
Chase reportedly serviced 6.8 million loans for $1.2 trillion as of June 30.
