Although federal regulators aren't giving many specifics as to how they might change servicing compensation, at least one participant in recent meetings with the government said they've decided on a number: 12.5 basis points.
Dave Stephens, vice president of United Capital Markets, a servicing advisory firm, said the Federal Housing Finance Agency (FHFA)has "given up" on the "concepts of the 0 basis point, three-basis point service fees and the 1% P&L [principal and interest] strip as servicing compensation."
He added that "They're more focused on a 12.5 basis point minimum service fee and they're open to industry suggestion of something else."
Stephens was among a dozen or so independent advisors who met with representatives of FHFA, Ginnie Mae, Department of Housing and Urban Development (HUD) and other agencies in Washington last week to discuss servicing compensation.
Currently, Fannie Mae and Freddie Mac servicers receive a minimum of 25 basis points to service GSE loans. At one point, FHFA was contemplating slashing that fee down to zero — a move that, in theory, might put many servicing advisors out of work. "If you don't need to hedge that servicing strip then why do you need advisors?" asked one participant in the meetings.
The Ginnie Mae servicing fee is 44 basis points.
In a recent interview with ASR sister publication National Mortgage News, Ginnie Mae chief Ted Tozer said regulators – including both FHFA and HUD – "are trying to find a happy medium" on fees.
Regulators may issue a formal proposal on servicing compensation by the summer.