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Big banks release their hold on mortgage servicing industry

But regional bank servicers on the rise

Many of the big banks are among the nation’s top mortgage servicers by portfolio volume, however they are slowly beginning to release their hold on the market.

Ongoing regulatory scrutiny is continuously pushing banks further away from servicing residential mortgage loans even as nonbanks continue to grow stronger, according to Fitch Ratings’ latest U.S. RMBS servicer handbook.

Portfolios for the largest bank servicers such as Wells Fargo, JPMorgan Chase, Bank of America and CitiMortgage dropped by 1.6% in the third quarter 2017.

Here is a look at how each of the big banks performed in the third quarter of 2017 compared to the year before, and where it fell compared to other servicers' volume.

Wells Fargo: This bank saw its servicing drop 2.9% from last year’s $1.5 trillion portfolio to $1.46 trillion in the third quarter of 2017. This makes Wells Fargo the No. 1 servicer in the U.S. by portfolio volume. Recently released HMDA data also showed Wells Fargo as one of the top mortgage lenders in the U.S. in 2016. And while it saw a decrease in its servicing portfolio from last year, its $51 billion acquisition of mortgage servicing rights from Seneca Mortgage Servicing last quarter could ultimately lift the portfolio size of the bank.

JPMorgan Chase Bank: This bank saw its servicing drop 4.87% from last year’s $864 billion portfolio to $821.9 billion in the third quarter of 2017. This makes JPMorgan the No. 2 servicer in the U.S. by portfolio volume.

Bank of America: This bank had a servicing portfolio of $503.6 billion in the third quarter of 2017. While it was beaten by several nonbanks, Bank of America remains in the top 10, and is the No. 5 servicer in the U.S. by portfolio volume.

CitiMortgage: This bank saw its servicing drop a significant 26.7% from last year’s $235.6 billion portfolio to $172.6 billion in the third quarter of 2017. But unlike the other banks, Citi already declared its separation from the mortgage servicing business earlier this year. Despite announcing it is leaving servicing, CitiMortgage remains the No. 8 servicer in the U.S. by portfolio volume.

On the other hand, several regional bank servicers demonstrated solid growth including Flagstar with an increase of 4.7% in the third quarter, HomeStreet Bank at 4.4%, First Republic Bank at 3.6% and PNC Mortgage Services at 2.2%.

The largest non-bank servicer, Nationstar Mortgage, which now does business as Mr. Cooper, continued its acquisition activity through the year, growing 7.6% over the year, according to Fitch’s report.

Of course, some nonbank servicers still struggled, including Ocwen Loan Servicing, which nearly went out of business in 2017. However, over the last few months, Ocwen began settling with some of the 31 states that took regulatory actions against the nonbank earlier this year over alleged escrow and other servicing issues.

Ocwen saw its servicing portfolio fall by 3.9% in the third quarter to $181.6 billion, the report stated.

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