Caliber is worried that if interest rates rise from current levels, the volume of prepayments and mortgage payoffs is likely to decline, which will reduce the cash available to fund servicing-advance obligations.
Nonbanks in the process of making their public debuts note that the refi boom (probably) won’t last forever, and they could eventually face financial difficulties making servicing-advance payments for loans in forbearance.
Issuance in the MBS and ABS markets seems to be humming along with tighter spreads. But industry participants warn investors should beware of over-optimism.
Trade groups representing nonbank servicers are in favor of the CSBS’ proposal, saying it would apply uniformly across states with some differentiation between the largest servicers and others.