Losses incurred for rep-and-warrant claims tied to MBS could total $89 billion eventually. However, banks have already reserved $88 billion, according to some tallies.
New York regulator Lawsky raised concerns about the servicing cost-savings long touted by Ocwen, which are achieved via technology and employees largely located outside of the U.S.
However, ARMs remain relatively rare in the MBS market. Fannie Mae, Freddie Mac and Ginnie Mae securitized only $41.6 billion of ARMs for all of last year, about 2.7 percent of their total MBS production volume.
The FHA allows low downpayments on loans that have credit scores as low as 580, but numerous lenders have established their own underwriting overlays to protect against poor performance.
Among other issues, the GAO found that for three of the servicers, their denial rates were significantly higher for Hispanics than for the comparison population of non-Hispanic whites.