Fannie Mae and Freddie Mac are considering overhauling the 25-basis-point servicing fee they pay to mortgage banking firms that process their loans, according to a report in American Banker.
The newspaper, a sister publication to National Mortgage News, cited industry sources, noting that "details are scarce" at this time.
While the fee structure could be altered in any number of ways, it's likely that the changes would reduce the value of servicing rights, which most sizable banks account for as a capitalized asset.
As NMN has reported several times, the value of MSRs has been under pressure since the housing bubble burst, and new Basel III rules will further reduce the ability of banks to count servicing contracts toward core capital.
Moreover, although there are some signs of life in the secondary market for bulk MSRs, most of the largest sales of the past two years have been government assisted deals.
Fannie, Freddie and their conservator, the Federal Housing Finance Agency, all declined to comment at this time, as did the nation's three largest servicers of mortgages: Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co. (Together, the three control 53% of the MSR market.)
Privately, several industry participants said they expected the GSEs would push to lower the fees. Dave Stephens of United Capital Markets, has been warning colleagues that the GSEs might seek to eliminate percentage-based servicing fees entirely.
"We need to make certain that this proposal is aired in an open process that considers the best interests of a wide constituency," Stephens, who hedges small to midsize banks' servicing portfolios, wrote in December.
