Mortgage Servicer Standards May Expedite Short Sales
Reuters reported last week that the Obama administration is proposing standards for mortgage servicers that would require “mortgage documents disclose the presence of second liens, such as a second mortgage or a home equity loan."
The Office of the Comptroller of the Currency draft would require banks and other mortgage servicers to safeguard and account for borrowers’ funds.
“Servicers would also be required, among other things, to provide borrowers with full and accurate information about their accounts and payment records,” the Reuters report stated. The Obama administration said that mortgage documents should disclose second liens or second mortgages and define the process for modifying it if the first loan becomes delinquent.
The primary focus of the proposed rules is to expedite the handling of second mortgages in short sales. In many short sales, the servicer of the second mortgage holds the short sale hostage, extracting as much as possible from the homeowner and first mortgage servicer.