MBA asks for more time on servicing fee structure rules
The Mortgage Bankers Association sent a letter to federal agencies this week, asking to delay new rules due in the summer governing how servicers are paid. John Courson, CEO of the MBA, sent the letter to Federal Housing Finance Agency Acting Director Edward DeMarco, Treasury Department Secretary Timothy Geithner and Department of Housing and Urban Development Secretary Shaun Donovan. In January, the three agencies announced they would be working with Fannie Mae and Freddie Mac to restructure mortgage-servicing fees and better align them with heightened loss mitigation needs. "MBA understands that the GSEs and other regulatory agencies are seeking to make a final decision on the servicing fee structure by mid-summer. MBA is concerned with a rush to judgment on this critical and complex issue," Courson wrote. The FHFA responded Thursday in a statement sent to HousingWire. "FHFA understands that any change to mortgage compensation could impact a number of participants in the mortgage market. The Joint Servicing Compensation Initiative has undertaken a deliberative process through the release of discussion documents and meetings with interested parties. We are continuing that process to ensure that relevant issues receive full consideration," FHFA spokesperson Corinne Russell said. The current servicing fee has remained at 25 basis points since the 1980's. But as foreclosure levels continue to break records in 2011, working more closely with the borrower to prevent these foreclosures has turned profits into losses. By changing the structure, federal agencies believe these companies will have more incentive to push modifications and other workouts higher. But questions remain. Early indications are that the servicer fee will change once a loan hits a certain stage of delinquency. Courson asked for more clarification on when in the process that would be, at 30, 60 or 90 days delinquent. Whether the "default servicing fee" will be a flat fee or structured to specific service is still to be determined, as is whether or not defaulted loans will be required to transfer to a third party or stay with the original servicer. At the Source Media Mortgage Servicing Conference Wednesday, Eric Green, the CEO of Real Time Resolutions, a specialty servicer, said he expects even securitization to be affected by the upcoming fee changes. "You're going to have two servicers on the securitization paperwork," Green said. "You would have the original servicer who will under a lot of pressure to get the loan performing again before the loan moves to the special servicer." Courson asked the agencies to ensure the industry receives answers to his questions before a rule is passed and allow them enough time to make give their input. "Servicing is the predominate asset of most mortgage companies," Courson said. "Thus, it is critical that changes to the current servicing fee structure be done with extreme caution, research, and input from stakeholders." The agencies could not immediately reply to requests for comment. Write to Jon Prior. Follow him on Twitter @JonAPrior.