Since the great housing bust, the mortgage business has been staging a saw-toothed comeback. And for one part of the mortgage finance industry, it is likely to get worse before it gets better.
Concerns for the future of mortgage servicing are starting to heighten as immense pressure from regulations increase, the potential of other regulations rises and demand grows. According to a report from Sterne Agee, there are four headwinds for mortgage servicers. At the MBA, it can be whittled down to 3.
“The regulations today have created a significant shift in the servicing landscape. While some companies have contracted or expanded their business in the servicing space, the changing landscape also lends to opportunities for key players,” Bill Cosgrove, Mortgage Bankers Association, 2014 chairman-elect, said at the opening general sessions of the MBA’s National Mortgage Servicing Conference & Expo 2014, going on right now in Orlando, Fla.
But for every concern, Cosgrove emphasized that the MBA is working to overcome and help servicers deal with the potential threats.
Cosgrove also noted three key areas where the MBA is keeping a close watch.
1. All eyes on the nonbanks
As more servicers rethink whether they want to remain in the servicing business or sell off their servicing rights to nonbank companies, MBA is working to keep a very close eye on ongoing regulatory activities aimed particularly at nonbank servicers.
2. FHFA fee assessment
The Federal Housing Finance Agency is debating reducing the 25 basis points servicing fee. And since it is not clear by how much they want to reduce it, it is creating even more cause for concern. “This could have adverse impacts to certain business models, particularly those that rely on the fee to compensate for the ever-growing cost of compliance,” Cosgrove said.
3. Grey regulatory direction
Servicers are getting conflicting direction from regulators and business partners. For example, Cosgrove noted that the Consumer Financial Protection Bureau wants to do everything to help ensure that homeowners can remain in their home. However, businesses have strict resolution and liquidation timelines from the FHFA and Fannie Mae and Freddie Mac.
But despite the growing concern from the MBA and the industry, many here believe that opportunities still exist to overcome the issues.
Regulations and regulators are well-intentioned, David Stevens, MBA president and CEO, explained. But it is time to demand consistency so the industry can get permanently back on track, he added.