What did servicers care about in 2013?
Loan transfers, asset sell-offs, new rules and massive legal settlements
If servicers thought the robo-signing crisis of 2010 kept them from moving forward at a robust pace for a few years, then 2013 for all intents and purposes was the year for the servicing side to put these aches and pains on ice and to heal old wounds.
In some cases, servicers managed to do just that. Facing changes in how mortgage servicing rights are calculated toward a firm’s Tier-1 Capital ratio under Basel III, servicers began selling off MSRs — and they became attractive property for firms who could see recovering prices around the corner and the potential to profit.
But at other times, the servicing industry remained haunted by ghosts of the recession’s past, with the Consumer Financial Protection Bureau (CFPB) heightening its oversight in 2013 and announcing a new set of standards for servicing shops. The bureau’s director Richard Cordray also sounded the horn on servicing transfers, forcing players in the market to pay extra attention to the onboarding process when transferring MSRs.
But what servicing stories captured the attention of HW.com readers in 2013?
HousingWire studied page views from the past year and compiled a list of the top servicing stories for 2013.
It turns out the most-read servicing story involved the fiscal cliff deal struck last January when Congress managed to extend a debt forgiveness law that allows homeowners receiving a loan mod or some other type of principal reduction to escape taxes on any portion of a mortgage debt that is written down or forgiven.
That story remained of interest in late 2013, considering Congress failed to extend a debt forgiveness law on loan mods and principal write-downs before breaking for the holidays. The housing industry is hoping the issue will be quickly picked up in 2014.
The year also brought a slew of mortgage servicing rights acquisitions. The second-most-viewed story of the year appeared right at the end of 2012 when Ocwen (OCN) finalized its acquisition of Homeward Residential. In the months following the deal, HW.com reported on a number of other MSR acquisitions.
The third-most-viewed servicing story of the year involved rumors that the Obama Administration aims to expand the Home Affordable Refinance Program.
Back in April, research firm Compass Point Research & Trading noted that the administration wants HARP 3.0. This, of course, occurred before Rep. Mel Watt, D-N.C., was confirmed to replace outgoing FHFA leader Ed DeMarco. Whether an extension of HARP eligibility occurs in 2014 or not is likely to become a major story in the coming year.
Then, there’s the Independent Foreclosure Review Settlement — a deal struck between federal regulators and more than a dozen servicers — to end an expensive probe into the loan files of homeowners who went through the foreclosure process during a key part of the financial crisis.
Realizing it would be too expensive to proceed with loan-level reviews, federal financial regulators struck a new deal, prompting servicers to pay $9.3 billion to get the issue behind them.
An article about that settlement — “Insanity of the Independent Foreclosure Review Settlement” — came in fourth on our most-read servicing stories list. The feature covered issues related to payments, the costs spent on consultants by government agencies handling the review and concerns posed by lawmakers and housing advocates that no data was released on the loan files actually reviewed.
The year 2013 also brought the official enactment of the California Homeowner Bill of Rights, a complex piece of state legislation that created a private right of action for borrowers in foreclosure cases, while outlining a laundry list of potential servicing violations that could land a bank in court.
Accordingly, the fifth-most-read servicing story in 2013 covered the first known case of the California Bill of Rights blocking a bank’s foreclosure — that bank being Bank of America (BAC).
The next-most-read stories related to the mailing of Independent Foreclosure Review settlement checks to thousands of borrowers, and Congressional probes into how consulting firms paid to review loan-level files under the initial foreclosure review handled the process.
During the year, mega servicers — Nationstar (NSM), Ocwen (OCN) and Walter Investment Management Corp. (WAC) — continued to grow. But Nationstar and Green Tree captured more eyeballs on the HousingWire home page when the firms announced that they would be acquiring billions of dollars worth of mortgage servicing rights and other assets from Bank of America (BAC) as part of a major settlement agreement between Fannie and BofA.