Trends In Servicing

Once again we can all listen to the yammering about the Federal Reserve's Open Market Committee meeting. But for those who would actually like to learn something about how the U.S. overnight money market works, and how the Federal Reserve's tools to implement monetary policy have evolved with the market, check out this video from the Chicago Federal Reserve. Yes, I know it is 18 minutes, but watch at least some of it if you really want to learn something.

And next week, Wednesday, December 9, from 2-3:30 PM EST, the MBA is offering up a webinar on Mortgage Servicing Rights. "Get guidance on how to manage the risks associated with owning Mortgage Servicing Rights (MSR), learn the pitfalls to avoid by doing so and explore lessons learned over the past several years.

Servicing continues to change hands although at a slightly slower pace than earlier this year. And the top servicers continue to add servicing through their own retail branch networks: Wells Fargo (with about $1.7 trillion it has about a 17% market share), Chase (with less than $1 trillion), followed by Bank of America. Per Inside Mortgage Finance at the #4 spot we see our first non-bank with Nationstar ($400 billion), followed by Citi, US Bank, and then Ocwen with about $300 billion. After that you'll notice the banks almost disappear: Walter Investment, PHH, Quicken Loans, PennyMac, then SunTrust, PNC, and BB&T (with about $120 billion). And then more non-banks: LoanCare, Caliber, Provident Funding, Fifth Third, Flagstar, and at #20 Bayview ($63 billion). Those who follow such trends are quick to point out that, aside from Nationstar, the top five all lost market share during the last year.

A while back Nationstar Mortgage announced its MPF Program will acquire FHA/VA Loans. NSM will be participating in a program with the FHLB to provide servicing-released execution to MPF Government MBS product. The MPF program purchases FHA, VA, and USDA loans and then securitizes them as Ginnie Mae securities. It remains unclear how much volume this program will generate. CLICK HERE FOR FULL KBW REPORT. Click here to view Ginnie Mae's MPF® Program and Ginnie Mae Broader Product Offering press release.

"To simplify doing business with Fannie Mae, we are partnering with DocuSign to provide an easy, fast, and secure way to execute many documents with us. The new process, which is rolling out in early December, enables electronic signatures and supports the tracking and handling of documents. Fannie Mae initially will implement eSignatures for Lender Master Agreements, Master Selling and Servicing Contracts, and certain custodial documents. The software is intuitive and simple to use and automatically walks the user through the process -- no training is required.

Yes, document deficiency issues is one of the primary challenges in providing for a streamlined and cost effective manufacturing process, and vendors such as MetaSource can help companies in the mortgage industry attack this problem starting in production (it can help Underwriting efficiency), Servicing, QC and file delivery to investors. With the challenges surrounding document management within the mortgage industry and all of the compliance and regulatory scrutiny, if you are not in line with best practices you are leaving your business at risk and financially exposed. The newest whitepaper from MetaSource will provide you with step-by-step tips for the entire loan life cycle.

Is the lender responsible for the condition of a property following a foreclosure? The sixth Appellate District court believed so in the Erlach v Sierra Asset Serving, LLC case. The Appellate court overturned the California trial court judgment granting the demurrer. In this case, a leased rental property was red-tagged for lack of utilities deeming the property uninhabitable. Four days later, the property was foreclosed by the defendant, Sierra Asset Servicing. The plaintiff, Joseph Erlach, sued Sierra for violating several habitability statutes. The full article including a YouTube video by Henry Chuang is available here.  Also of interest on the BankRate website is the top 10 for foreclosure in July.

Turning to interest rates the U.S. Treasury market sold off Wednesday on hawkish remarks from Atlanta Fed President Lockhart, better-than-expected ADP employment data, and a positive surprise for unit labor cost growth. Everyone, and their brother, and Fed governors, is talking about a Fed liftoff on December 16. Fed Chair Yellen's comments began hitting the news around lunch time (EST) and they pretty much confirmed the market view regarding a December short term rate hike.

Today we'll have a bevy of news including the statement from the European Central Bank followed by Draghi's press conference (nothing dramatically new). We've had the Challenger job cuts for November (31k, down 39% from October), weekly initial jobless claims (+9k to 269k), and ahead of us are Markit Services PMI, Factory Orders, more speeches & testimony from the Federal Reserve's Yellen, Mester, and Fischer. For numbers we saw a 2.18% close on the 10-year T-note and this morning we're at 2.22% with agency MBS prices worse .250.