Possible irregularities in the foreclosure process at two mortgage servicers has their servicer ratings facing a possible downgrade.
Litton Loan Servicing LP’s SQ2+ primary servicer quality rating for subprime mortgages was placed on review for a potential downgrade Thursday by Moody’s Investors Service. Also on watch is its SQ2+ special servicer rating.
At issue are “possible irregularities in Litton’s foreclosure process which could result in delayed foreclosures and longer REO timelines, as well as reputational risk and legal challenges to previously completed foreclosures for the company,” according to the New York-based ratings agency.
The Goldman Sachs unit reportedly announced on Oct. 8 that it would halt some foreclosures while it reviews procedures in the documentation review process.
Litton serviced 308,770 loans for $48.4 billion as of June 30, Moody’s said.
Also placed on review was MetLife Home Loans’ SQ2- primary servicer rating for prime mortgages. Moody’s cited similar concerns as it did for Litton and noted that MetLife temporarily postponed foreclosure sales in some states.
Moody’s said MetLife expects to re-file any necessary affidavits by November.
MetLife serviced $95.2 billion as of June 30.
PHH Corp. President and Chief Executive Officer Jerry Selitto issued a statement today that PHH Mortgage “has not halted foreclosures in any states and has no plans to initiate a foreclosure moratorium.” He noted that the company has conducted “a comprehensive review of its foreclosure procedures” and is cooperating with its regulators.
PHH serviced $156.0 billion as of the end of June.
