Servicing

With economists fearing high unemployment stemming from the pandemic, the housing finance system is grappling with how it will recoup lost revenue from delinquencies, forbearance plans and other tremors.

Real estate investor Tom Barrack said predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep commercial mortgage borrowers from defaulting.

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.

The pandemic has upended staffing plans, sparked concerns about servicers’ capacity to handle the expected crush of missed payments, and even raised questions about their ability to stay afloat.

Mortgage companies that borrow heavily to keep their operations running may face financial pressure from coronavirus-related market volatility as it affects the valuations of collateral securing their financing.

Mortgage lenders could benefit from the surge in refinancing due to widening market spreads, and that could help offset damage to servicing rights portfolio valuations, according to Keefe, Bruyette & Woods.

Fannie Mae completed its first two Credit Insurance Risk Transfer transactions of 2020, shifting $1 billion of single-family loan credit risk to insurers and reinsurers.

Any impact from the coronavirus outbreak on commercial and multifamily loan delinquencies won't be known for some time, the Mortgage Bankers Association said.

The cancellation by New Residential of a money-losing subservicing agreement should benefit Ocwen's financial results going forward, the company said.

Black Knight introduced a model to gauge prepayment speeds and credit risk for investors that purchase commercial mortgage-backed securities.

The Federal Housing Finance Agency plans to increase liquidity standards for nonbank conforming loan servicers, and at the same time raise the net worth requirements for those that also perform the function for Ginnie Mae.

Despite changes by the Federal Housing Administration, bankers remain reluctant to join the program for fear of legal liability. But that could change if it revamps servicing processes, experts say.

The delinquency rate for commercial mortgage-backed securities ended 2019 at its lowest point in nearly 11 years, aided by increased issuance and the resolution of legacy transactions, Fitch Ratings said.

The Department of Banking and Insurance in New Jersey is warning that enforcement of a 2019 residential mortgage servicer licensing law will begin next year.

A trade group is looking into why New York Gov. Andrew Cuomo felt foreclosure risks were too high to sign a bill that would have approved reverse mortgages for cooperative properties.

A report from the Financial Stability Oversight Council cited a bigger share of originations and servicing by nonbanks as a potential vulnerability in the financial system.

According to Moody's, Ally's latest auto-loan ABS will not require the issuer to repurchase loans with modified terms or maturities.

The nonbank share of large mortgage servicing is growing, but smaller players tend to be depositories, the Consumer Financial Protection Bureau found in a new report aimed at examining regulatory impacts.

Nationstar’s next securitization of defaulted or inactive home equity conversion mortgages will have a higher-than-average exposure to properties with steep leverage, as well as ties to judicial foreclosure states.