DALLAS--“No one here needs to be told that there’s been a paradigm shift in the servicing industry over the past few years,” said Pete Mills, senior vice president of residential policy and member services with the Mortgage Bankers Association. “You’ve been seeing it and living it.”
Here at the MBA National Mortgage Servicing Conference & Expo, representatives from HUD, Fannie Mae, Freddie Mac, Ginnie Mae and Veterans Affairs addressed changing servicing market dynamics and how they have adjusted to more closely align with mortgage servicers.
Charles Coulter, deputy assistant secretary for single-family housing with HUD, said the department has reworked its loss mitigation strategies to ensure that more homeowners stay in their homes, as well as minimize losses in business. “This is especially important for our books of business from 2006-2009,” he said.
Coulter said FHA’s book of business improved substantially in 2012. He said FHA helped more than 445,000 homeowners avoid foreclosure through loan modifications and sold more than 106,000 properties. Additionally, FHA paid $98 million in loss mitigation incentives, which he said will ultimately improve FHA’s bottom line.
Additionally, Coulter said FHA had strengthened its REO process, streamlining operations and working toward improving the quality of REO properties for sale.
“For the most part, we believe FHA is aligned with the Consumer Financial Protection Bureau’s rulemakings,” Coulter said. He added that FHA would issue rulemakings addressing potential points of conflict.
Tracy Mooney, senior vice president of servicing and REO with Freddie Mac, said the company’s strategic objectives focus on improving servicer performance and REO management and disposition strategies.
Of Freddie Mac’s portfolio of 11 million loans, nearly 350,000 are seriously delinquent. “The good news here is that delinquencies are declining, and the number of new loans entering delinquency is slowing,” she said. “But the needle needs to move more.” She said Freddie Mac will issue guidance detailing improvements in its loss mitigation processes, such as targeting loans in early and late stages of delinquency.
Leslie Meaux, director of monitoring and asset management with Ginnie Mae, said the agency’s outstanding portfolio balance grew to $1.34 trillion, a 213 percent increase since fiscal 2007. Ginnie Mae currently finances 48 percent of the home purchase market, issuing mortgage-backed securities issued by lenders that issue loans insured by FHA, VA and the Rural Housing Service.
“We’re seeing quite a shift in the business models of applicants to be issuers of Ginnie Mae pools,” Meaux said. “Many of them are looking to be exclusive Ginnie Mae issuers.”
Meaux added that given the increasing size and complexity of its programs, Ginnie Mae is strengthening its oversight and monitoring of issuers, particularly in servicing and document custody. These include increased frequency of field reviews, operational reviews and development of an Issuer Scorecard, currently under design.
“The majority of the new issuers in our program are using sub-servicers,” Meaux said. “We want to ensure that any new issuer has the proper oversight plan and qualified staff to oversee the servicing. The issuer is ultimately responsible for the quality of the servicing.”
Leslie Peeler, senior vice president of the national servicing organization with Fannie Mae, said her division’s platform focuses on a number of key areas, including simplified products and standards. “We think this provides our servicers with discretion and clarity in addressing issues,” she said.
“Homeowners are counting on you,” Peeler said. “We have a shared mission and shared priorities, of keeping families in their homes, stabilizing neighborhoods and protecting the taxpayers.”
Terry Cere, loan specialist with the Department of Veterans Affairs, said the number of foreclosures on VA properties fell by more than half in fiscal 2012, thanks in part to successful loss mitigation programs and repayment plans.
“The loss mitigation efforts are very important in keeping our veterans in their homes and helping them avoid delinquency and foreclosure,” Cere said. She added that VA has increased its incentives and its incentive payments to VA servicers to improve loss mitigation efforts.