Shrinking Servicing Balances Mean What?

At the end of March mortgage servicers were processing $9.5 trillion in residential loans, a 4% decline from the same period a year ago. (Figures courtesy of National Mortgage News and the Quarterly Data Report.) Now, 4% may not seem like a huge number, but then again, you have to consider historical trends. The trend I’m talking about is this: Over the past three decades (and probably even further back) mortgage debt outstanding in the U.S. never declined. (Of course, home prices never declined either – that is, until the financial crack-up of 2008.) Indeed, the industry is swimming in unchartered waters, but the servicing side of the business (from a profit standpoint) probably offers more opportunities to vendors than lending. But rest assured, these “corrections” in the business won’t last forever. Sooner or later the business will turn around. It’s just a matter of when…