New large mortgage servicing rights transfers expected to be completed in the last half of 2013 indicate banks will continue to offload defaulted, high-risk loans into the hands of nonbanks, according to analysts.
Fitch Ratings reported incessant transfers of the servicing rights on nonagency RMBS assets from one owner to another during the second quarter of 2013 will affect delinquency risk and foreclosure timelines.
The findings echo
Residential mortgage servicers still face foreclosure and delinquency timeline management issues despite the continuous
Among reasons behind “a marked difference in the time to resolve delinquent loans between bank and nonbank servicers,” Fitch lists regulations and staffing levels, which make it more challenging for nonbank servicers “to maintain shorter timelines as additional highly delinquent loans move from the banks' portfolios to the nonbank servicers' portfolios.”
Ocwen is one such buyer taking advantage of MSR sales opportunities up for grabs.
Ocwen’s recent decision to acquire MSRs from IndyMac Mortgage Services, a division of OneWest Bank FSB and from Greenpoint Mortgage Funding Inc. follows the completion of the acquisition of the Homeward Residential and GMAC Mortgage portfolios.
The Homeward and GMAC portfolios increased Ocwen’s volume of subprime loans and added both prime and alt-A products to its portfolio mix, analysts note. By the end of the second quarter Ocwen was servicing 47% of all nonagency RMBS subprime loans.
Nationstar also continues onboarding its sizeable MSR acquisition from Bank of America that was announced in January.
Several servicers and master servicers adjusted principal forbearance loss reporting, which resulted in “servicer-related loss volatility” during the second quarter.
As part of their MSR acquisitions both Ocwen and Nationstar “passed through roughly $1 billion in principal forbearance-related losses” during the quarter, analysts wrote, causing concern about their “servicer and master servicer reporting and the timing of loss recognition.”
Furthermore, this reporting issue is expected to continue “to drive further loss adjustments in the third quarter,” Fitch said.
