Federal bank regulators are looking to reduce the capital requirements that apply to mortgage servicing rights and to mortgages held in portfolio. A March proposal is seen as making mortgage lending and servicing somewhat more attractive for banks.
As a group, the five largest firms in terms of owned servicing lost market share during the first quarter of 2026. Much of the decline was due to Rocket Mortgage, the largest servicer in the industry. (Includes three data tables.)
As delinquencies rise, servicers will face increasing obligations for advances to MBS investors. Large servicers are expected to be able to handle the pressure while some smaller servicers could face difficulties.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association, believes the Basel III re-proposal would allow banks engaged in the mortgage business to further expand their operations.
Some of the largest servicers of loans in Ginnie Mae mortgage-backed securities saw portfolios shrink in the first quarter, according to a new ranking and analysis by Inside FHA/VA Lending. (Includes four data tables.)
The improvement in mortgage performance seen in early 2026 was weaker than in the first quarter of the prior two years. Much of the difference was due to an increase in loans 120+ days delinquent, with particular issues involving FHA mortgages. (Includes two data tables.)
GSE servicing outstanding barely budged during 2025 while Ginnie servicing increased by 6.8% on an annual basis. In owned servicing, the only firms with major gains in 2025 were nonbanks. (Includes two data tables.)
The proposals would reduce capital requirements of banks in terms of mortgages held in portfolio and for mortgage servicing. Federal banking regulators said the goal is to help banks better compete with nonbanks.
The costs of servicing nonperforming FHA loans were high enough for Mortgage Center, a Michigan-based credit union service organization, to change its strategy.