The Mortgage Bankers Association is asking the Federal Housing Finance Agency for more information on what servicers might be paid if a loan moves from being current into the ‘default’ category.
In a new letter sent to FHFA, the Treasury Department and HUD, MBA president John Courson says the trade group has yet to hear “any discussion” on what the default servicing fee might be, adding that the processing of troubled mortgages “is a substantial component to evaluating the impact of changing the current 25 basis point servicing fee.” (Courson will soon depart MBA with FHA commissioner Dave Stevens taking his place at the trade group.)
Among other things, MBA also wants to know when the default servicing fee will be triggered – when a loan is considered 30-, 60-, or 90-days or more delinquent.
At present, Fannie Mae/Freddie Mac loans carry a minimum 25 basis point servicing fee. FHFA and HUD, with input from the GSEs and industry, are contemplating changing that minimum fee, possibly reducing it to 10 to 15 basis points for performing loans, but with more pay going to a servicer when a loan is considered in default.
Some servicing advisors told National Mortgage News that they have problems with paying mortgage bankers more for default servicing because it provides an incentive to allowing a loan to go bad. “They can put off working a problem loan to earn more money,” said on advisor, requesting his name not be used.
MBA is asking the agencies not to rush a servicing proposal, noting that servicing is “the predominate asset of most mortgage companies.”
As reported by NMN, FHFA and HUD hope to have an MSR fee proposal ready for comment by July.
