Fitch: Banks cut back on mortgage servicing staff by 50%

Borrower performance improving

Bank mortgage servicers cut mortgage servicers by 50% in the past two years, according to the latest quarterly U.S. RMBS Servicer Handbook by Fitch Group, which deals in financial information services with operations in more than 30 countries.

This decline in staff is due to a decrease in portfolio sizes as loan performance improve among borrowers, according to the report.

Foreclosure inventory and completed foreclosures decreased significantly in July from last year, according to the July 2016 National Foreclosure Report released by CoreLogic, a global property information, analytics and data-enabled solutions provider.

While banks are cutting back, however, nonbank servicers are still focusing on growth. Borrowers at nonbanks generally require more frequent interaction, driving the need for more staff.

While the average number of full-time mortgage servicing employees at banks decreased to 4,000, down from 8,000 two years ago, the same can’t be said for nonbanks. The number of mortgage servicing employees at nonbanks actually remained stable at 2,000 for the same time period.

Lower mortgage delinquencies aren’t the only thing causing banks to lay off employees. High credit quality portfolio additions brought on by origination activity also contributed to the decrease.

Bank servers now manage twice as many mortgages per employee compared to nonbank servicers. This comparison is not likely to change anytime soon, according to Fitch.

This drastic decrease over the past two years isn’t surprising, however, considering the recent overall disappointment in the jobs reports.

Payroll employment increased in August, but not as much as ADP predicted. Total nonfarm payroll employment increased by 151,000 in August, according to a report released by the U.S. Census Bureau.

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