ORLANDO — Regulators
Mortgage servicers who gathered in Orlando last week to fret over the regulations and other problems facing their businesses were met with a surprise: nearly every regulator who spoke at the conference actively solicited their feedback.
"We really want to hear from the servicing community on things they're concerned about or worried about," said Christopher C. Haspel, a senior advisor for securitization and servicing at the Consumer Financial Protection Bureau. He was one of several government officials to speak last week at a conference hosted by the Mortgage Bankers Association.
Julia Gordon, the manager of single-family policy at the Federal Housing Finance Agency, was even more explicit.
"I can't tell you how many times we've made a change from what we've heard in the field," said Gordon, a former senior policy counsel at the Center for Responsible Lending. "I've only been here 10 months, but I can assure you, we are trying to talk to all stakeholders."
Servicers will have their hands full in the months ahead trying to implement more government policies, some of which are tweaks to
Though regulators said at the conference that they want to reduce "uncertainty" for servicers, they acknowledged that some of their policies will lead to more costs and regulatory risks.
"We do understand that one of things mentioned about tighter credit availability is putback risk," said Mario Ugoletti, a special advisor to Ed DeMarco, the FHFA's acting director.
That putback risk is more prominent than ever, and has caused problems for some of the biggest mortgage servicers. Last week Bank of America Corp.
Servicers are also dealing with the cloud of suspicion they have been under ever since the industry's widespread robo-signing practices came to light.
Now regulators are demanding far more documentation of servicers' loss-mitigation and foreclosure processes, including audits and reviews of loan files. Federal regulators also are working on national servicing standards that are expected to contain more stringent reporting requirements.
"The servicers are increasingly required to report on every detail," said Diane Pendley, a managing director at Fitch Ratings. "Transparency is definitely the theme."
Nigel D. Brazier, a managing director at Newbold Advisors, said servicers need to identify each regulatory change, create processes to implement the changes that hold employees accountable and track their progress.
"It all comes down to making sure every step of the process is tracked and documented," Brazier said. "Servicing should be like a utility with a consistent set of practices."
Fannie Mae, Freddie Mac and the Federal Housing Administration have all made changes to get servicers to resolve the massive backlog of seriously delinquent loans and those in the process of foreclosure. They are pushing this year for more short sales and deeds-in-lieu of foreclosure, and for better disposition of real-estate owned properties.
Charles Coulter, a deputy assistant secretary for single-family housing at the Department of Housing and Urban Development, which oversees the FHA, said HUD will roll out
Coulter also wants feedback. "We want to continue the outreach to all of our servicers," he said.
Freddie Mac also has a new scorecard with "rewards and fees," to prod servicers to increase short sales and alternatives to foreclosure, said Tracy Mooney, a Freddie senior vice president of single-family servicing and real-estate owned property.
Freddie will be adding "boots on the ground" in Florida this year to focus on its "aged inventory," Mooney told servicers during a panel discussion at the conference. The government-sponsored enterprise also plans to roll out a new methodology for getting better valuations of REOs, he said.
"We're doing this to minimize dysfunction in the market place, by hopefully eliminating broker-appraiser coercion, and the stigma of severely undervalued REO," Mooney said.
Some mortgage servicers still are dragging their feet when it comes to quality control. But some conference attendees were still putting more blame on the borrowers, and the industry's former widespread lax underwriting standards.
"It's hard to put a value on oversight and investments in compliance," said Pendley. "But I have to get over being physically ill when I look at a loan because many of the borrowers were just not qualified. The servicer didn't put the borrower in that situation."
