Special servicers continue to outperform the big banks when it comes to dealing with distressed mortgages, and that bodes well for the future of transferring distressed servicing rights, according to a new report by analysts at Compass Point Research & Trading. “Servicers have been under a ton of scrutiny in the past several quarters due to their servicing practices,” the analysts said, based on their review of homeowner complaints to the CFPB. “However, as the complaint data show, the special servicers screen as being significantly better at servicing distressed mortgages compared to the big banks.” According to their analysis, US Bank (18.2 percent), PNC Financial (14.8 percent) and SunTrust (11.3 percent) have had the highest level of complaints per delinquent ...
Non-agency MBS backed by nonperforming mortgages that include a program manager benefit from the unique oversight provided by the manager, according to Moody’s Investors Service. However, there are concerns that in some instances the program manager’s interests may conflict with those of senior bondholders. Moody’s said program managers typically set performance targets and monitor servicers’ progress at the loan level, adopt foreclosure strategies that reduce timelines and expenses and direct servicers’ loss mitigation strategies. The managers are more common on non-agency MBS backed by nonperforming loans than on non-agency MBS backed by newly originated mortgages. Program managers are...
Ocwen Financial, which has been under intense regulatory scrutiny most of the year, stopped buying delinquent loans out of Ginnie Mae pools during the third quarter, according to a review of loan-level data by Inside MBS & ABS. The cessation of buyouts is unusual and has some MBS analysts scratching their heads, wondering whether more trouble could be afoot at the nation’s largest nonbank servicer. According to a new report from Barclays, the reduction in buyouts by Ocwen (as measured by prepayments) “could be due...[Includes one data chart]
Seven years after the financial crisis, market demand for non-agency residential MBS remains feeble, at best – mostly because of higher yields elsewhere, convexity risk concerns, bond liquidity and pricing and missing structural reforms, industry participants say. “Even with the modest amounts of RMBS issuance that we’re seeing, the market is still struggling to digest those securities. We saw that last year and in the beginning of this year. So the question is: what’s driving that lack of demand?” said Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City last month. In advance of the public discussion, Pereira queried...
Due-diligence and document-file reviews will key Fitch’s rating of residential MBS backed by re-performing loans and seasoned mortgage loan collateral, based on revised criteria, according to a recent report from Fitch Ratings. Fitch recently finalized its criteria for analyzing re-performing and seasoned loan RMBS to include closer attention to risk factors. Fitch uses its mortgage loan-loss model as well as representation-and-warranty and due-diligence reviews in analyzing the key risk drivers for RPLs. However, since the methodologies currently used by the rating agency were developed with an eye towards newly originated and seasoned performing collateral, RPL pools and some seasoned performing pools purchased in the secondary market are likely to be influenced...
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