Tag Archives: non-bank servicers

Non-bank servicers creating bigger mortgage problems

The government and Congress have been asleep at the wheel as usual of the rise of non-banks in the financial world. Big banks were clever to sell off their mortgage servicing rights of non-performing loans little by little to the non-banks such as Ocwen, Nationstar, and other non-banks. And government sold off their non-performing loans to the non-banks because the big banks refused them. What the big banks know and the government will soon realize that the Dodd-Frank bill doesn’t have tight regulations for the non-banks but only the large banks. The bill doesn’t go as far to regulate the non-banks but only the big banks. The government agency that has tight regulations for non-banks is CFPB. Both the big banks and the government have been made the non-banks much bigger which will create much bigger mortgage problems.

It’s hard to find a more sympathetic foreclosure story than Kathleen Conrad’s.

The disabled widow of a Marine who served in Vietnam, Conrad, 66, lives in a rundown Westchester house the couple bought in 1999, realizing their modest version of the America dream.

But after her husband died in 2004, Conrad faced larger-than-expected cuts to her widow’s benefits. During the 2007 housing market boom, she took out a second mortgage from GMAC. In 2013, Conrad fell behind on payments and was contacted by her loan’s new owner, Infinite Customer Systems and the strong-arm tactics began to get Conrad out of the home.

Unlike big banks, non-bank servicers like Infinite are not bound by even the modest consumer protections built into the National Mortgage Settlement (NMS) of 2012.

Non-bank servicers are taking a page from their predecessors’ playbooks. Sources say that many of the same old problems the NMS partially sought to address are back with the nonbank servicers, including long delays in reviewing loan modifications and wrongful denials of loan modification requests.

Read on.

FHFA Unveils Financial Rules for Nonbank Mortgage Servicers

The Federal Housing Finance Agency on Friday unveiled financial requirements for nonbank lenders that originate and service mortgages, a change designed to reduce risk at mortgage-finance companies Fannie Mae and Freddie Mac .

The proposed standards are directed at nonbank mortgage companies such as Ocwen Financial Corp. and Nationstar Mortgage Holdings Inc. These companies sometimes originate mortgages, but also buy from lenders the right to collect mortgage payments from borrowers, send payments to mortgage investors and process foreclosures.

The standards could affect the availability of mortgages to some borrowers because some nonbanks may need to divert resources to meet the requirements. On the other hand, the proposal appears to be less stringent than some analysts expected.

Nonbank lenders and servicers that do business with Fannie and Freddie will need to have a minimum net worth of at least $2.5 million plus 0.25% of the unpaid principal balances of all the mortgages they service, said the FHFA, which regulates Fannie and Freddie. Before, Fannie and Freddie set requirements based only on their own mortgages managed by the servicers.

The servicers will also need other liquidity requirements and a tangible net worth—excluding goodwill and other intangible assets—that is equal to at least 6% of the servicer’s total assets, a standard Fannie Mae already had in place.

Read on.

Non-Bank Servicers Under the Microscope – Who Will Service Loans?; HELOC Problems Ahead?

In July 1776, the estimated number of people living in the newly independent nation was 2.5 million. (Nowadays, this is approximately the number of people on the freeway in Atlanta or Seattle during rush hour.) The nation’s estimated population on this July Fourth is over 318 million. So we should all invest our money in anything that appreciates with population growth, right?

California has gobs of people, and as California goes, so goes the nation, right? The California State Assembly approved SB 1459. The bill is now enrolled and sent to the governor for signature or veto. The California Mortgage Bankers Association “has vigorously supported the legislation, which will allow use of the Uniform State Test (UST) for California MLOs.  The bill would also modify hourly education requirements, requiring MLOs to get 2 hours of state-focused pre-license education (as part of the 20 hour requirement) and 1 hour of state-focused continuing education (as part of the 8 hour requirement).”

(This reminded me of a note I received a while back from an LO at a large bank. “Are any of the guys emailing you about bank registration versus LO licensing actually producers? I was licensed in more states than most, and it means zilch. Realtors don’t care; clients don’t care. Everyone wants the same thing which is to hit contract dates without excuses. Like everyone else I crammed before the test, bought some practice exams, did some forgettable education, passed the tests and the next day I quickly forgot it all then went back to originating. The same goes for Continuing ED; I click through a bunch of screens and forgot everything a few hours later. At my bank they flood us with training – do the vast majority of LOs remember the minutiae? Big producers will produce regardless of if they are licensed or registered and their referral sources don’t care.

“The Community Home Lenders Association (CHLA) urged the Federal Housing Finance Agency (FHFA) to take actions which could facilitate a transition to mortgage market reform, in a manner that protects consumers and promotes competition. In a letter to FHFA Director Mel Watt, the CHLA said that any transitional actions that FHFA takes should focus on these pro-consumer objectives, by promoting competition and consumer access to community-based lenders and by preserving GSE infrastructure to maintain securitization access and a non-discriminatory cash window. Specifically, the CHLA urged FHFA to: Carry out its risk sharing pilots in a manner that preserves competitive access to securitization, prohibits vertical integration, prohibits volume discounts, and tests out a risk sharing guarantee at the loan level; conduct research into the impact of various reform structures on the preservation of a cash window that meets the needs of all lenders and the consumers they serve; complete work on a common securitization platform and single security; adopt immediate G Fee parity and equal terms and conditions for all lenders; and evaluate access and affordability under different risk sharing options.”

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