Smaller companies that perform residential mortgage servicing are rapidly growing their loan portfolios — and not just in the default servicing space, according to Fitch Ratings.
Among U.S. special servicers with fewer than 400,000 loans, loan portfolios grew by nearly 20% year over year, Fitch reported in its latest quarterly U.S. RMBS Servicer Handbook. Comparatively, portfolio growth for all servicers came in at 2% over 2015's figure.
And the smaller special servicers aren't limiting their portfolio growth to nonperforming loans — primary serviced loans grew by an average of 52% across their portfolios, Fitch said.
"This trend is in line with takeaways from Fitch's recent U.S. RMBS Servicer Roundtable event, in which many servicing executives noted that nonbank special servicers could seek out new origination volume to offset declining delinquent loan volume," Fitch said in a news release.
Another trend Fitch found in its report was the increased use of loan modifications by nonbanks as a form of loss mitigation. This method was used in 72% of cases this quarter versus 64.8% a year ago.
Fitch also reported that staffing at nonbank servicers fell by 4.3% on average. Banks kept their full-time staffing the same during the quarter, but expanded their temporary staff by 2.7%.