Banks Doing an End Run on MSRs?

If anyone thought the nation's megabanks were going to take the "regulators' medicine" with their mouths widen open, they thought wrong. I'm talking about (of course) the whole mess surrounding servicing fees, servicing standards and the big one: the servicing settlement with the AGs. The first piece of evidence is JPMorgan Chase selling off a large chunk of its MSRs to the servicing arm of IBM last fall. The next move is the story we broke over the weekend about a Wall Street firm offering a "sale-leaseback" option on MSRs. (See our weekend 'What We're Hearing' column.) What these two stories say is this: Okay, Mr. Regulator (or is it Ms.?), give us a hard time on servicing, and we'll find a way to take it off balance sheet where your reach doesn't extend. And then lastly, there's the issue of the "Rising REITs." Redwood Trust has completed two jumbo MBS deals. Provident Funding has filed with the SEC to raise $300 million via a REIT offering. Why are REITs looking so powerful these days? Answer: because they don't have to answer to the Federal Deposit Insurance Corp.