Lawmakers bury gold nugget for servicers in FHA reform bill
Specialty mortgage servicers may stumble upon a new stream of business if a proposed Federal Housing Administration reform bill takes effect in the future.
The Senate Banking Committee tweaked the proposed 'FHA Reform' bill this week to include a provision that would allow the FHA to transfer subservicing duties to specialty servicers.
Granted the bill has yet to reach the floor for a full vote, but the change could prove beneficial to servicers if the legislation ever takes effect.
"I think the first thing it would do is open up a large swath of business for special servicers," said Kevin Kanouff, CEO and president of specialty servicer Statebridge Co. out of Denver.
Kanouff says essentially the change would allow "the FHA to have more of say in where the servicing" function is performed, creating more competition among servicers to provide clients with high quality, high-touch mortgage servicing.
As of now, when a firm owns or purchases a pool of FHA loans, "they dictate where the servicing is going to be and that servicer reports to the FHA on their performance," Kanouff pointed out.
But if passed, the new provision in the bill provides the FHA with enough discretion to move home loans to a different subservicer.
"Who wins in this scenario?" Kanouff asks. "Certainly the borrowers, the FHA and the taxpayers."
For servicers, it can mean more competition, but also an opportunity for those who can set themselves apart as highly qualified to handle a certain FHA pool, Kanouff suggests.