Nonbank RMBS servicers shift from defaults to portfolio growth: Fitch

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Nonbank residential mortgage-backed securities servicers increased their conforming and government portfolios by nearly 20% in the past year as the market moved further from the Great Recession, according to Fitch Ratings.

As commitments to the government-sponsored enterprises rose year-to-year, over 90% of the mortgage servicers rated by Fitch decreased their portfolio share of delinquent home loans between the first quarter of this year and the fourth quarter of 2017.

GSE portfolio distribution ranged from 25%-50%, with one company hitting a maximum of 140%, according to Fitch's latest U.S. residential mortgage-backed securities servicer handbook. The outlier with 140% growth was Bayview Loan Servicing, which pumped $2.2 billion into its Fannie Mae portfolio.

All of these trends are in line with a market in which the housing crash is more of a distant memory, and there has been strengthening credit and fewer delinquent borrowers.

"Mortgage servicers are benefiting from a positive credit environment with clean paying loans becoming the norm and seriously delinquent loans fading from view," said Fitch Managing Director Roelof Slump in a press release. "Special servicers are seeking out new avenues of business as the volume of reperforming loan product available in the market continues to diminish."

Earlier this month, Fitch Ratings cut its loss projections on credit risk transfer deals for seasoned government-sponsored enterprise loans due to underlying mortgages outperforming expectations.

The increasing home values since the start of 2018 were another reason those projections fell and overall capital to Fannie Mae and Freddie Mac servicing continues to climb.

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RMBS Nonbank GSEs Credit risk transfers Mortgage defaults Servicing Fitch Fannie Mae Freddie Mac