The Federal Housing Finance Agency (FHFA) is expected to release its long-awaited proposal on changing servicing compensation by July with three main options being offered to the industry, according to servicing advisors close to the issue.

The three options that the industry will get to comment on involve restructuring the servicing payment from the current 25 basis point minimum to one where just three to five basis points are offered; a 12.5 basis point payment; and a flat fee paid to the servicer of $7 to $10 per month per loan.

A FHFA spokeswoman declined to comment except to say, “We are refining our proposal and hope to release it in the near future.”

The change in servicing compensation would only apply to loans serviced for Fannie Mae and Freddie Mac. It’s unclear what change, if any, would apply to mortgages packaged into GNMA securities.

At this time it’s expected that FHFA will not make any specific recommendations itself and instead would play the role of mediators, offering these three proposals. It would then gather industry comments, which would shape some type of compensation change that would be presented mid-2012 at the earliest.

In a recent note to its servicing clients, United Capital Markets, Denver, said, “The good news is that the discussion seems to have taken an introspective turn with more and more participants on both sides of the issue, from GSEs to mortgage servicers, now saying that we need to have a more thoughtful debate, including leaving the MSF (minimum service fee) where it is.”

As reported by National Mortgage News recently, Fannie Mae is pushing for the fee to be cut to at least 12.5 basis points, if not lower, with Freddie Mac and GNMA leaning toward no change at all. All these parties have declined to comment on where they stand on the issue right now.

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