Fitch Ratings on Thursday assigned a negative outlook on the entire U.S. residential mortgage servicing sector, citing growing concerns over the defects that have been identified in the foreclosure processes at some servicers.
A negative outlook indicates that any rating change over a two-year period is likely to be a downgrade.
Fitch said even servicers fully compliant with all foreclosure rules and regulations will be affected by the documentation scandal.
"Final resolution of the foreclosure affidavit concerns and the multiple resulting investigations, along with assigned ownership rights prior to initiating foreclosure actions, may not occur until well into 2011 and possibly beyond," said Diane Pendley, a Fitch managing director.
According to responses from a recent survey of all the servicers Fitch rates, about one-third have completed reviews of their foreclosure processes and the accuracy of their affidavits.
"These servicers do not believe they will need to take any corrective action or make any changes to their current processes at this time," Fitch said. "Some servicers have estimated that they will be able to complete their review within the next several weeks, while others are still unable to give a specific estimate of how long it may take to complete their reviews."
