Liabilities for Servicers: Localities Jump in the Game

As if the federal-state settlement with the largest mortgage servicers didn’t give the servicing industry enough to do, localities, including cities, towns and counties, are ratcheting up demands on all servicers in connection with the maintenance of foreclosed homes.

This trend ties in to the recent state and federal enforcement actions that, among other things, require servicers to supervise more closely their third-party vendors, including contractors, real estate brokers, and property maintenance vendors engaged by servicers to manage real estate owned properties.

For example, boarding up foreclosed homes and maintaining them in compliance with code standards is usually contracted to third-party vendors, and, as discussed in one of the author’s recent article “Will Vendors Create New Liability for Servicers?” these contracts can create potential risk for the servicers involved.

Reprinted with permission.