Mortgage bankers suggest new servicing fee option
The Mortgage Bankers Association proposed a new servicing fee structure that would set aside the cash needed to treat nonperforming loans. The Federal Housing Finance Agency, Ginnie Mae and the government-sponsored enterprises began considering a new mortgage servicing fee structure in January. As delinquent loans mounted after the subprime meltdown and the foreclosure pipeline jammed, the existing fee structure could no longer fund the extra work needed. The current model provides a minimum servicing fee of 25 basis points with an assumed guarantee fee of 20 bps and a 5 bps servicing fee the servicer can cash out or hold as a mortgage servicing right. In February, the FHFA released four options under consideration to replace the old system. One structure allows for the servicer to take an unguaranteed interest in the both the principal and interest in lieu of being paid a fee based on the interest strip. The other three models assume minimum servicing fees of 12.5 bps, 3 bps and no minimum servicing fee, which the FHFA dropped as an option, according to the MBA. See graph below for details. Jon Prior. Follow him on Twitter @JonAPrior.