Housing and Urban Development Secretary Shaun Donovan addressed the need for Congress to grant the Federal Housing Administration authority to require transfer of servicing to specialty borrowers on Thursday.
Donovan testified before the Senate Banking, Housing and Urban Affairs Committee following the FHA’s November actuarial report.
By transferring authority, FHA could better avoid losses arising from poor servicing of FHA-insured loans, would could yield better results for both borrowers and the federal agency, Donovan stated in his recovery guidelines to avoid a first-time Treasury draw.
Ocwen (OCN), Nationstar Mortgage Holdings (NSM) and Walter Investment Management (WAC) are the specialty servicers capable of servicing FHA loans, according to policy strategist Isaac Boltansky of Compass Point.
Ocwen will acquire FHA servicing rights as part of the ResCap acquisition, which is expected to close in the first quarter of 2013.
Nationstar current services FHA reverse mortgages it acquired in the first half of the year and is also considering expanding to single-family FHA servicing.
Walter acquired reverse mortgage originator/servicer Reverse Mortgage Solutions on Nov. 1 and is considering expanding its servicing to include single-family FHA loans.
FHA also plans to use the FHA’s adjustment premium pricing again this year, which is the third time the agency has utilized its flexibility. FHA will increase its annual mortgage insurance premiums by another 10 basis points.
"While the new loans being made today are profitable to FHA and we do not want to over-burden or constrict access to credit as the housing market continues to mend, we also must ensure that we are 1) rebuilding adequate reserves for the future and 2) phasing out of our counter-cyclical role by reducing FHA’s footprint in the marketplace and helping to facilitate the return of private capital," Donovan stated.