Non-bank mortgage servicers continue to be targets of federal regulatory scrutiny, this time due to concerns about servicing transfers regarding loans backed by Fannie Mae and Freddie Mac.
A report issued last week by the Federal Housing Finance Agency’s (FHFA) Office of the Inspector General (IG) detailed a number of concerns involving nonbank servicers selling the rights to service troubled loans in bulk to new companies specialized to handle them.
One of the major concerns included the risk of these companies, who are assuming responsibilities for servicing large volumes of mortgage loans, not having the infrastructure to do so.
Of the 30 largest mortgage servicers, those that were non-banks held a 17% share of the mortgage servicing market at the end of 2013, up from 9% at the end of 2012 and 6% at the end of 2011, noted FHFA in its report.
“This rise in nonbank special servicers has been accompanied by consumer complaints, lawsuits, and other regulatory actions as the servicers’ workload outstrips their processing capacity,” stated FHFA.
Non-bank special servicers currently hold approximately $1.4 trillion in mortgage servicing rights out of a nearly $10 trillion market, according to the report.
Paying particular attention to non-bank servicers is Ginnie Mae, which expressed similar sentiments raised by the FHFA report last week, according to an article from National Mortgage News.
The federal agency has experienced a large volume of servicing transfers over the last 18 months and has spent a considerable amount of time working with new non-bank servicers, many of which were not accustomed to servicing loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs, NMN notes.
“We are dealing with that by literally spending a lot of time upfront to ensure the people know what they are doing and they are competent before taking on the servicing,” said Ginnie Mae President Ted Tozer in an interview with NMN.
View the NMN article.
Written by Jason Oliva