Slow or No Portfolio Growth for Top Firms

Most of the nation's top-ranked residential servicers saw little or no growth in their portfolios during the fourth quarter, and some firms even experienced a decline.

According to survey figures compiled by Mortgage Servicing News, the nation's top 10 servicers, as a group, experienced a 2% decline in receivables over the past 12 months as refinancings and other factors chipped away at their portfolios.

It should come as no surprise, but the firms with the largest declines are companies experiencing problems in their mortgage units: CitiMortgage, a subsidiary of Citigroup, saw its portfolio decline by 11% to $718 billion, while Residential Capital Corp.'s receivables fell by 12% to $350 billion.

GMAC Financial Services, which owns ResCap, has said repeatedly that it is exploring "strategic alternatives" in regard to the mortgage business, but has yet to confirm the unit is actually for sale.

(No willing buyers have emerged, investment banking sources told MSN.)

In recent months a number of top executives have been fired at ResCap as part of a corporate downsizing, including Tony Renzi, a 24-year veteran of the company, and another executive there who has been instrumental in growing its subservicing business the past few years.

Another top 10 servicer experiencing a decline was National City Mortgage, Miamisburg, Ohio, now owned by PNC Financial Services. NCM, which has retained its name despite being bought by PNC Bank about 15 months ago, experienced a 15% decline in servicing rights.

OneWest Financial, Pasadena, Calif., had the largest decline among the top 10, down 23%, but its volume is an estimate based on previously reported numbers.

The privately held OneWest Financial, the "successor" company to IndyMac, declined to provide any guidance on its servicing business.

In general, the residential servicing business is in a state of flux with declining interest rates causing run-off.

Very few of the nation's largest servicers are buying bulk or flow packages in the secondary market (as they've done in the past), opting instead to see their portfolios flat line or decline slightly.

Two servicers among the top 10 had decent to strong growth rates in the fourth quarter: U.S. Bank Home Mortgage, Minneapolis (up 21%), and SunTrust Mortgage, Richmond (up 11%).

U.S. Bank Home Mortgage and SunTrust are large regional banks that have weathered the financial crisis by avoiding subprime lending and are now gaining market share thanks to a decline in competition caused by retrenchment or failure.

U.S. Bank Home Mortgage saw its portfolio grow to $187 billion at the end of last year from $159 billion at the end of 2008, while SunTrust Mortgage finished right behind it at $176 billion, up from $159 billion at the end of 2008.

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