The mass transfer of loans to new servicers is apparently working to the benefit of residential mortgage-backed securities, with new servicers improving overall loan performance within pools, a research report from Opera Solutions suggested this week.
The data analytics firm released a study after following 12 banks and servicers and analyzing loan performance data from both sides of the transfers.
Tracking nine months of activity following each transfer, the research firm discovered servicers on the acquiring end increased loan modification activity and generally maintained lower 60-plus day delinquency rates when compared to the previous servicers.
"Acquirers are actively managing their portfolios, resulting in better performance overall," said Bill Hunt, vice president of Opera Solutions. "After diligently flushing foreclosure pipelines upon acquisition, post-transfer FC/REO rates have remained lower. Further, acquirers have increased loan mod activity, and have been able to maintain lower 60+ delinquency rates post-mod."
The study specifically looked at Ocwen Financial (OCN), which has been under the microscope since it began acquiring large amounts of MSRs in 2012. Opera found that Ocwen "engaged in a high level of servicing activity immediately following a transfer."
Opera says when studying loans formerly serviced by Bank of America (BAC), which were acquired by Select Portfolio Servicing, the trend showed it taking several months before loan performance improved.
"This is not entirely unexpected; a new servicer may need more time when on-boarding loans to correct data issues before commencing collections," said Hunt.