InfoBytes, October 8, 2010 - Weekly In-depth review of news & developments in the financial services industry

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Topics In This Issue

• Federal Issues

• State Issues

• Courts

• Firm News

• Mortgages

• Banking

• Consumer Finance

• Litigation

• Credit Cards

Excerpt from "Federal Issues"

Fannie Mae Issues Letter Directing Servicers To Review Policies and Procedures Relating to the Execution of Affidavits, Verifications, and other Legal Documents In Connection with the Default Process. On October 1, Fannie Mae issued Lender Letter LL-2010-11 (the "Letter") directing all servicers to immediately review their policies and procedures for the execution of affidavits, verifications, and other legal documents in connection with the default process. The Letter indicates that the request for review was prompted by issues that have arisen with respect to defects in the execution process, including whether individuals executing affidavits on behalf of servicers have the required personal knowledge to execute the documents and whether the affidavits were properly notarized. Servicers must send any concerns resulting from their review to Fannie Mae in writing. Fannie Mae also reiterated its existing Mortgage Selling and Servicing Contract (the "Contract") and Servicing Guide provisions relevant to judicial foreclosure policies and procedures. Specifically, under the Contract, a lender must (i) take prompt and diligent action consistent with applicable law or regulations to foreclose on a loan; and (ii) properly manage, dispose of, and effect proper conveyance of title to a foreclosed property in accordance with the Contract, the Selling and Servicer Guides (the "Guides"), and any pertinent laws, regulations, or mortgage insurance policies or contracts. The Letter also notes that, in general, servicers must:

• Have sufficient and properly-trained staff, and adequate controls and written quality assurance procedures to, among other things, protect against fraud, misrepresentation, or negligence by any parties involved in the mortgage servicing process...

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