The performance of large mortgage servicers of non-agency residential MBS, including their ability to prevent or cure loan delinquencies, varied widely during the 12 months ending in June 2011, due in no small part to foreclosure moratoria imposed on some, but not all, servicers, according to Moody’s Investors Service. The company’s inaugural Servicer Dashboard report found that during the June 2010 to June 2011 period, JPMorgan Chase and Bank of America exhibited overall poor servicing performance in contrast to CitiMortgage, GMAC and Ocwen. A major impediment to Chase and BofA’s servicing performance, Moody’s noted, was the fact that...

In a somewhat unusual announcement last week, Walter Investment Management said it was servicing approximately 910,000 loans representing approximately $59.0 billion of unpaid principal balance as of the end of the third quarter of 2011. The announcement was unusual because that was the extent of the statement. “We believe the major increase in the servicing portfolio could be due to Walter being allocated a portion of the servicing rights related to the Fannie Mae/Bank of America deal, whereby Bank of America sold the servicing rights to 400,000 loans to Fannie Mae,” said analysts at FBR Capital Markets. ...

Smaller issuers of Ginnie Mae mortgage-backed securities will find it easier to pledge mortgage servicing rights (MSRs) to obtain warehouse financing and better compete with their larger rivals, thanks to changes announced recently by Ginnie Mae. Changes to the “Acknowledgment Agreement” will make it simpler for Ginnie Mae to honor servicing pledges and allow the transfer of related servicing rights. They also clarify and limit the conditions under which Ginnie Mae can deny an issuer’s request to transfer servicing to the issuer’s creditor. Under the previous 2007 procedures, an issuer seeking Ginnie Mae’s approval to pledge its rights to servicing income as a security for a loan from a private lender must ...

Mortgage servicing shops should soon expect extra-special scrutiny from the Consumer Financial Protection Bureau and perhaps even a visit by bureau examiners as part of a servicer supervision strategy announced late last week. “Mortgage servicing has a huge impact on consumers and is a priority for the CFPB,” said Raj Date, special advisor to the Secretary of the Treasury for the CFPB. “The mortgage servicing market has been bogged down by widespread reports of pervasive and profound consumer protection problems. We are going to take a close and measured look at whether servicers are following the law.” The CFPB has indicated that...

Last week, GMAC Mortgage announced implementation of the Responsible Homeowner Reward Program to provide monetary incentives to underwater VA loan borrowers who continue making payments on their loans. The RHRP was designed by the Loan Value Group as a way to address negative equity without necessitating additional documents or new underwriting. Homeowners build up their reward each month for a fixed period of time, so long as they are current. The size of the reward is consistent with the negative equity and severity of the loan. If the borrowers meet all of the payment milestones on time, GMAC Mortgage will...

After negotiating with a potential buyer, Bank of America gave up trying to sell its correspondent business and will simply shut the program down by the end of the year, leaving a huge potential hole in the market. The rumored bidder, NationStar Mortgage, reportedly wanted a higher price than BofA was willing to pay to take the correspondent unit off the bank’s hands. “After a comprehensive review of market opportunities, Bank of America will close its correspondent lending channel by the end of 2011, following an orderly transition with clients,” the company said in a written statement. BofA, which had already...

Servicers face increased costs to meet new loss mitigation requirements. However, servicers at the Mortgage Bankers Association’s annual conference this week in Chicago said they have accepted the costs as a trade-off for decreased liability. “We focus on profitability, but you still have to do quality,” said Kent Lemon, a senior vice president at Saxon Mortgage Services. He said the servicer constantly works on quality assurance. Saxon uses targeted performance monitoring of employees for the Servicemembers' Civil Relief Act, fair servicing standards and other loan modification guidelines. Lemon said the servicer also...

Closer scrutiny of portfolio loan quality and growing repurchase demands have pushed mortgage software providers MasterServ Financial and The Prieston Group to develop products to help lenders manage their portfolio risks and reduce buyback risks. MasterServ Financial, a technology solution provider to the mortgage banking industry, is expanding its portfolio monitoring product from distressed real estate loans and REO management to new portfolios of performing mortgage loans. With the shift in real estate values, a weak economy and high unemployment rate, it is very difficult to determine whether the loans in a lender’s portfolio today are...

The Obama administration’s Housing Scorecard for September paints a reasonably rosy picture of efforts to help troubled homeowners and future market prospects. With record low mortgage interest rates, housing affordability increased modestly. But the number of new default notices rose from 59,500 in August to 78,900, which is still well below the 96,500 level of a year ago. Notably, sales of real estate owned properties were down this period. Preliminary numbers from July 2011 show that there were 46,200 REO sales, as opposed to 62,200 in June and 61,800 a year ago. New home sales were down slightly in...

In five years, the mortgage servicing business will likely be dramatically different than it is now or has been in the past, experts say, and getting there won’t be easy. “Homeowners think servicing is about them, that the industry should be trying to solve their problems,” said Peter Swire, a law professor at Ohio State, during a panel at this week’s Mortgage Bankers Association annual convention. “But the servicer is working primarily for the investor,” he said, adding that the “legal structure of servicing makes the homeowner extraneous.” Although there is widespread acknowledgement that change is necessary, the significant...