Ginnie Mae Gets Proactive Amid Concerns About Nonbank Servicers
Ginnie Mae is paying particular attention to nonbank servicers due to the same concerns an inspector general has raised about servicing transfers involving Fannie Mae and Freddie Mac loans.
Chief among those concerns is that many nonbank servicing companies are undercapitalized and didn't have the infrastructure and processing capacity to take on as many GSE loans as they did last year, according to a Federal Housing Finance Agency's Office of Inspector General report issued Tuesday on the risks nonbank servicers pose to the government-sponsored enterprises.
"I have the exact same concerns that the IG mentioned in their report to the FHFA," Ginnie Mae President Ted Tozer said in an interview Wednesday.
Ginnie Mae has seen a large volume of servicing transfers over the past 18 months and its monitoring staff has spent a lot of time working with the new nonbank servicers. Many of these new players were not accustomed to servicing loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs, says Tozer.
"We are dealing with that by literally spending a lot of time upfront to ensure the people know what they are doing and they are competent before taking on the servicing," Tozer said.
Nearly $150 billion in servicing tied to Ginnie Mae mortgage-backed securities was transferred in 2013, nearly 10% of all Ginnie servicing.
Ginnie Mae recently halted the transfer of mortgage servicing rights from Bank of America (BAC) to a nonbank servicer because the bank is missing documents such as recorded mortgages and title policies on the underlying home loans.
While servicing transfers have slowed this year, Tozer estimates that Ginnie has seen mortgage servicing rights transfers that are comparable (on a percentage basis) to what Fannie Mae and Freddie Mac have experienced.
Tozer's agency has created a "spotlight program" to work with new issuer/servicers and help them adjust to Ginnie Mae requirements.
This proactive approach has "taken a lot of resources during this transition but it is working really well," Tozer said.