The government-sponsored enterprises together have about $600 to $700 billion in unpaid principal balance tied to mortgage loans that will eventually require special servicing, suggested Paul Miller, with FBR Capital Markets, in a report Wednesday.

Miller's estimation provides a sampling of what servicing opportunities await certain specialty servicers next year if they specialize in high-touch, credit sensitive loans.

The potential beneficiaries of this pipeline include special servicers, with Miller highlighting Walter Investment Management (WAC) and Nationstar Mortgage Holdings (NSM) as potential beneficiaries, Miller suggested.

Miller believes specialty servicers will assume most of the high-touch, credit-sensitive troubled loans from traditional servicers as those larger players struggle with today's regulatory landscape and new capital requirements. These changes are making it more difficult for traditional servicers to handle large volumes of troubled loans at one time, he noted.  

Miller cites Federal Housing Finance Agency data, which shows Freddie Mac has about $200 billion in unpaid principal balance that needs servicing, while Fannie Mae has $300 billion in servicing assets to shed. The FHA has about $150 billion in agency paper.

"This implies a total available unpaid principal balance pool between $600 billion and $700 billion, which should be more than enough to support growth for the company's servicing business in the near term," Miller noted.

Miller also is strong in his outlook for private-label servicer PHH Corp. (PHH) and has raised his target price from $25 per share to $28 heading into 2013.

The company faced a $200 million write-down on its own mortgage servicing rights in the third quarter as mortgage rates fell, but with current mortgage rates down only 8-basis points, Miller says "markdowns" in the fourth quarter will mostly likely be "benign."

He concluded, "We continue to believe PHH will benefit into 2013 as mortgage rates level off and the company builds cash at a meaningful rate given a continuation of elevated cash gain-on-sale margins and origination volumes."