Servicing

Due to more stringent government loan requirements and increased oversight by regulators, small servicers have experienced problems with traditional subservicers. These problems include high delinquency ratios under Ginnie Mae, high FHA curtailments, low loss mitigation workout ratios and challenges with conveying properties to FHA.

After the federal government recently announced that it plans on launching a pilot program in the first quarter this year to sell Fannie Mae, Freddie Mac and Federal Housing Administration REO homes in bulk to investors, two California companies have decided not to wait to develop their own rental platform.

Although insurance conglomerate MetLife failed to unload its residential mortgage banking business, it is moving forward with a plan to sell its profitable warehouse lending division, according to industry officials briefed on the matter.

JPMorgan Chase suffered a residential repurchase loss of $390 million in the fourth quarter, a 17% increase from the year earlier period, and a sign that Fannie Mae, Freddie Mac and other secondary market investors are not easing up on their buyback demands.

Insiders who see a housing market rebound ahead are not equally optimistic about delinquencies and foreclosure rates in a market that at best will be flat.

What thoughts should guide ongoing Congressional consideration on housing finance? Let's start with this one: "It is increasingly clear that the Fed and the U.S. government's entwinement with the housing market is one of the greatest economic distortions on earth" (as the Lex Column of the Financial Times wrote).

Examiners from the Consumer Financial Production Bureau will begin entering nonbank residential lending shops in February and March, according to the bureau's newly appointed "permanent" director, Richard Cordray.

Citigroup Inc. appears to have abandoned its plan to sell its consumer lending unit -- which also makes real estate loans -- until the economy improves and it can fetch a better price for it, according to Fitch Ratings Inc.

Sabal Financial Group, a financial services management firm, has acquired a $204 million portfolio of performing and nonperforming loans from the Federal Deposit Insurance Corp.

Recent recommendations of the Federal Reserve provide guidance that may benefit the private-label residential mortgage-backed securities sector, according to Fitch Ratings.