United Capital Markets, which helps firms hedge their servicing portfolios, says the Federal Housing Finance Agency (FHFA) could be all wet on several assumptions in its Joint Servicing Compensation Initiative, a document that thrives to revamp GSE servicing fees.

Among other items, UCM slams FHFA's calculations on the equity required to support MSRs, accusing the agency (in its 28-page JSCI document) of overstating the requirement by 100%.

In a rebuttal to FHFA's proposals for MSRs, UCM criticizes: incorrect accounting assumptions by the agency; overstated multiples for the value of excess servicing; and the regulator's belief that "the earnings from the escrow balances cover the cost to service." The Greenwood Village, Colo.-based firm said the last assertion is just not true.

A FHFA spokeswoman declined to comment on UCM's claims.

The regulator issued its JSCI document last month. It uses servicing cost figures dating back to 2007, though it says similar figures are contained in a more recent study done by Amherst Securities Group.

The FHFA document analyzes different servicing compensation models, including one where the servicing fee is just 3 basis points compared to the current payment minimum of 25 basis points.

FHFA said: "The three basis point and 0 basis point minimum servicing fee examples (plus float/ancillary) are assumed to be 'adequate compensation' for PL [performing loan] servicing — all remaining ongoing servicing economics are therefore not capitalized but rather recognized as earned/incurred."

Mortgage servicers expect Fannie and Freddie (which are operating under the close scrutiny of FHFA) to change their servicing fees some time this year.

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