As federal agencies work on creating a new servicing fee structure, the Mortgage Bankers Association (MBA) is recommending they consider a reserve account that would be used to pay the higher costs of servicing delinquent loans.
Under MBA's reserve account proposal, the new servicing fee would be 20 to 25 basis points. An additional five basis points would be collected from the homeowner's payments and set aside in a trust account.
These funds would be used to pay the higher expenses associated with servicing delinquent loans, MBA president and chief executive David Stevens says in testimony submitted to the House Financial Services Committee.
"Servicers could recapture the funds based on specific seasoning, level of portfolio performance and other factors deemed appropriate," Stevens said at Thursday's hearing.
He also told the committee members that MBA will be making "preliminary recommendations" for creating national servicing standards later this year.
"We believe a national servicing standard would be beneficial to streamline and eliminate overlapping requirements," Stevens said.
"However, a national servicing standard must be truly national in scope and not simply another standard layered atop the already overwhelming number of servicing requirements," he added.
For more of Stevens' statements to the committee, please click here.