In these uncertain times, the primary goal of local foreclosure boards is to help clients meet their ever-changing needs. Most law firm employees and lawyers have considerable experience that, in many cases, spans decades and covers the entire process of failure. Unfortunately, many of these knowledgeable individuals are standing idly by right now, as the many moratoriums have brought failing legal services to a grinding standstill. In addition, it is very important for service providers to gather information from their various local foreclosure attorneys about foreclosure restrictions for each state and/or jurisdiction. While moratoriums on seizures are in place, service providers can determine which actions are legally permitted in each state to ensure that they are proceeding with their respective portfolios in a practical and legally responsible manner, and to ensure that they are prepared to take preclusion measures once the moratoriums are lifted. On March 25, 2020, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The U.S. House of Representatives passed the bill on Friday, March 27, 2020, and President Trump signed it the same day. The stricter CARES moratorium on seizures replaced all previous federal moratoriums imposed between March 18, 2020 and March 19, 2020. Another area that existing standard operations should focus on is pre-sales documentation.
In more restrictive jurisdictions, it is important that seizures carefully consult with local lawyers on the preparation and preparation of the documentation required to facilitate the first expedited legal filing once moratoriums are lifted. “Good planning prevents poor performance” is said to prevent poor performance, so pre-planning this process in collaboration with local law firms minimizes legal issues and shortens restart time. Local lawyers have experience in their respective jurisdictions and can gather the necessary information to put each case in an appropriate position to file quickly once the moratoriums are lifted. Much of this information can be collected while the queues are still in place. Fiduciary representations can be executed, assignments can be executed and prepared for registration, and assignments can even be registered in jurisdictions that have electronic registration. Title remedies may continue and estate applications may be filed for deceased borrowers. In certain circumstances, under CARES, if real estate is vacant, the seizure process may continue if state law permits. Service providers should contact lawyers in different jurisdictions to see if state moratoriums are more restrictive. If not, a lawyer could help review vacant units to move the process forward. Ensuring that this information and documents are ready and processed will allow service providers and local law firms to work quickly to initiate seizure actions as soon as they are able to do so, and will mitigate the shock to these services when seizures resume.
While it is always very important for service providers to understand what actions are legally permitted in each jurisdiction, it is equally important to ensure that they are prepared to take seizure action once the locks are lifted. While it can be difficult to change perspectives to see the delay as beneficial, in states where service providers have had time to prepare, service providers should maximize this preparation in collaboration with local law firms. We don`t have a crystal ball and we don`t know what the future holds for the standard industry, but what we do know is that repairers and consultants can work together to prepare for the many common challenges faced before and after the lifting of moratoriums imposed due to the COVID-19 pandemic. DBRS Ratings GmbH (DBRS Morningstar) has confirmed the ratings of Caixa Geral de Depósitos (CGD or the Bank), including the long-term issuer rating of BBB and the short-term issuer rating of R-2 (high). The bank`s deposit ratings were confirmed at BBB (high)/R-1 (low), one notch above the intrinsic rating (IA), reflecting the Portuguese legal framework, which provides for full depositor preference in bank insolvency and resolution proceedings. The trend in long-term ratings has shifted from negative to positive. CGD`s AI is maintained at BBB and the support rating at SA3. A full list of reviews can be found at the end of this press release. It may seem far away now, but at some point, in the not too distant future, the moratoriums imposed will all be lifted.
When this happens, it will be incumbent on many service managers to be willing to deal with files that have been on hold for an extended period of time. Therefore, it is important that foreclosure service providers focus on creating and preparing the necessary documentation during these mandatory seizure locks. Information and documentation necessary to send government or contractually required notices prior to the commencement of foreclosure, or to bring an initial lawsuit, may be completed and submitted to the local foreclosure attorney while the execution deadlines are still in full effect. Ensuring this documentation is ready will allow local service providers and law firms to work quickly to proceed with seizure actions as soon as they are able to do so. Since the COVID-19 pandemic was first declared in the United States, numerous federal and state moratoriums have been imposed on seizure and deportation measures. The bank`s large stock of loans supported by COVID-19 moratoriums largely expired in September 2021. Most clients have resumed repaying their debts without having had a significant impact on the bank`s asset quality so far. The downside risk to asset quality is, in our view, limited if the pandemic remains under control, but in the medium to long term, it could be strained by uncertainty stemming from persistently high inflationary pressures and the potential impact of the war in Ukraine. CGD`s credit quality has remained broadly robust since the start of the pandemic, as lending moratoriums and other government support measures have protected the bank from deteriorating asset quality, particularly in sectors such as tourism and hospitality, hospitality, transportation, leisure and entertainment, who have been hardest hit by the pandemic. At the end of Q1 2022, gross outstanding non-performing loans stood at $2.1 billion. EUR and therefore remained broadly stable compared to the previous year 2021.
The gross NPL ratio was 2.8%, stable compared to fiscal 2021, but lower than in the same period of 2021. The coverage ratio remains solid. Going forward, DBRS Morningstar expects CGD`s gross NPL ratio to remain below 3%, in line with the bank`s strategic plan for 2021-2024. The confirmation of ratings and the positive feedback take into account the Bank`s leading position in the Portuguese market, its strong funding and capital, as well as its resilience during the pandemic. The positive trend also includes our expectation that CGD will consolidate the progress made in reducing its balance sheet and continue to maintain good cost control. CGD further reduced its stock of non-performing loans (NPLs) in 2020 and 2021, while the formation of new non-performing loans during the pandemic and post-moratorium period was less pronounced than expected. In addition, the Bank is making progress in revenue generation and profitability indicators. However, growing uncertainty in the bank`s operating environment due to persistently high inflation and the potential impact of the war in Ukraine could increase pressure on earnings and credit risk in the medium term, DBRS Morningstar said. The primary focus of repairers during this unprecedented time has been, and likely will continue to be, to help mitigate damage. While seizure measures are mandatory, service providers are inundated with loss mitigation requests, including but not limited to loan modification requests, repayment plans, forbearance agreements, deeds in lieu of seizures, and short selling. Service providers must not only compile the information and/or documentation necessary to fully screen borrowers for all applicable alternatives to foreclosure loss mitigation, but also ensure that they comply with Consumer Financial Protection Bureau (“CFPB”) regulations regarding loss mitigation requests.
See 12 C.F.R. § 1024.41. In addition, service providers must review borrowers to identify appropriate mitigation options and make decisions on each application. Throughout this process, repairers must ensure that they are fully compliant with all applicable CFPB guidelines and local regulations. Due to the expected significant increase in requests for mitigation assistance, it may be difficult to review and respond to mitigation requests in a timely manner within CFPB or local timelines. To date, more than 3 million cases of COVID-19 have been reported worldwide. In the absence of a vaccine and with no way of knowing when the curve will fully flatten, federal and local governments have taken drastic and unprecedented measures to ease the burden on borrowers affected by the virus.