Itís not just originators that are feeling the yolk of heavy regulations. Servicers, too, face many new regulations from the Consumer Financial Protection Board. Nine, in fact.
The future is here. The dreaded Jan. 10 regs are in full effect. Now the question is, what are the best practices servicers and vendors need to know to stay up-to-date in a fast-changing world? (Make that a blindingly fast-changing world!)
In addition to new rules, servicersí worlds are still being rocked by the continuing parade of settlements related to practices (hopefully long abandoned) from and just after the mortgage collapse. The New York Times has just run an estimate of $50 billion still in the pipeline that will need to be coughed up. Thatís a lot, even though there has seemed to be one settlement a week recently.
One good thing thatís going on is that defaults and shadow inventory seem to be dwindling. Rick Sharga, executive vice president of auction.com, recently visited us and estimated there may be another two million in this pipeline.
While thatís still a lot, Sharga notes the industry has been clearing them at about a million a year. That would target 2016 as the return of servicing to near-normality, especially with the pristine books of business lenders have been writing in recent years.
But, will that happen? Will servicing be content to be relegated once again to quiet, steady, boring back-office duty? Itís hard to imagine it will.
For one thing, thousands of former originators have been hired by mortgage servicers (some of them servicing the same loans they underwrote, or didnít underwrite). And the bright line between originations and servicing has definitely blurred a little bit.
So we see servicers in underwriting, usually the job of originators, when they do loan modifications. (A very smart practice, since why do a loan mod to create a second loan that will go bad?) Credit counseling, which used to happen before a loan was originated, has migrated over to the servicing side to be used to help mitigate defaults.
We can help you understand these topics. Thatís because our Mortgage Servicing Conference, to be held April 23-25 in Dallas, is keyed exactly to strategies to help servicers thrive in a top-heavy regulatory environment. Questions about compliance, staffing and the future of the niche now that the foreclosure crisis is finally easing off will be addressed by top-flight servicing participants and observers.