The Mortgage Bankers Association (MBA), in a new comment letter, strongly urged the government not to change the current GSE servicing compensation model, shooting down a Federal Housing Finance Agency (FHFA) proposal that would pay loan processors $10 per month for performing loans.
In a 42-page letter (including exhibits) dated Dec. 8 the trade group complains that FHFA's proposal would be a step of moving “toward more government involvement” in housing finance at a time when the White House is trying to wean mortgage banking off of government support.
Moreover, the grade group – headed by former FHA chief David Stevens – complains that Fannie Mae's recent purchase of $74 billion of MSRs from Bank of America puts the GSE in the position of being a direct competitor of private market servicers. (MBA does not name BofA in the letter, but according to ASR sister publication National Mortgage News, the deal was consummated in the third quarter. No purchase price was ever disclosed.)
The FHFA regulates Fannie Mae and Freddie Mac, and serves as their conservator.
For well over a year now, the agency has been contemplating changing the current 25 basis point minimum servicing fee for GSE loans and is seeking public comment.
In September FHFA issued a “discussion paper” on the topic, offering just two models: a flat fee for service (FFS) and a 20 basis point payment with a five bp reserve.
To date, the agency has yet to offer any estimate on how much a servicer would be paid for processing troubled loans.
Over the past three years both GSEs have seized problem MSR portfolios because they were not pleased with the loss mitigation efforts of firms such as Flagstar and Bank of America