FHFA report notes risks of nonbank servicers


Noting some nonbank servicers use short-term funding to buy MSRs which may only pay off after a lot of long-term work the Office of Inspector General says the practice can jeopardize not just the companies' operations, but also Fannie Mae (FNMA) and Freddie Mac (FMCC) which guarantee the loans.

The report notes nonbank servicers held 17% of he MSR market at the end of 2013, up from 9% a year earlier, and the boosted share is testing their ability to handle the loans. No particular servicer is named in the report, but those in the industry include Ocwen (OCN -1.9%), Nationstar (NSM -2.6%), Walter Investment (WAC -0.8%), New Residential (NRZ +0.3%), Home Loan Serviing (HLSS +0.9%), and PennyMac Financial Services (PFSI +0.5%).

The report cites one example in which the GSEs found a servicer didn't have sufficient infrastructure to manage its MSRs and also breached minimum capital requirements.

NY's Ben Lawsky, of course, has put the kibbosh on transfers of servicing rights from the banks to the nonbank players until his concerns over servicing practices are satisfied.

From other sites
Comments (2)
  • habear
    , contributor
    Comments (88) | Send Message
     
    where's the data Or reports to support?
    1 Jul 2014, 11:09 AM Reply Like
  • BigOlDave
    , contributor
    Comments (423) | Send Message
     
    Click the "Office of Inspector General" hot link for the FHFA Report. No data or support. Just an expression of concern that might be followed by more governmental regulations, audit protocols or similar meddling. I own shares of HOME LOAN SERVICING SOLUTIONS LTD (HLSS) and it doesn't look like a flaky "nonbank player" this Report seems to be targeting. If this forces the flakes out of the business, that's fine with me. There shouldn't be any servicers that are doing less than a thoroughly professional job. (HLSS) seems to have its act together.
    1 Jul 2014, 01:41 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs