Freddie notes, “The volume of specialty servicing may shrink as the number of legacy loans dwindles, but specialty servicing is likely to remain an active part of the mortgage servicing industry…”
The 2008 Housing and Economic Recovery Act stipulated that the baseline limit could not be lowered when house prices were falling. And during recovery, there could be no increase until the HPI reached its previous high, in the third quarter of 2007.
FINRA made some concessions to the industry in the proposal issued in October, but many MBS traders warned of dire consequences if the proposed margin requirements take effect.