PROJECTThe Mortgage Servicing Collaborative

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  • Help Me Understand Mortgage Servicing
  • What is Mortgage Servicing?
  • Who is Involved with Mortgage Servicing?
  • What is Default Servicing?
  • How Does Securitization Affect Mortgage Servicing?
  • Mortgage Servicing Collaborative Members
  • Mortgage Servicing Factsheets
  • Mortgage Servicing Glossary
  • Mortgage Servicing Research
  • Status Updates
  • May 2, Full collaborative meeting
  • June 14, Government programs work stream meeting
  • July 18, Data working group meeting
  • July 24, Collaborative advisory meeting
  • August 30, Data working group meeting
  • August 31, Full collaborative briefing
  • September 25, Loss mitigation and modification experience work stream meeting
  • October 19, Consumer advisors meetings
  • December 19, 2017, Full collaborative meeting
  • January 25, 2018, Monthly member briefing
  • February 22, 2018, Monthly member briefing
  • March 22, 2018, Monthly member briefing
  • April 10, Standards working group meeting
  • April 26, 2018, Monthly member briefing
  • May 24, 2018, Monthly member briefing
  • June 19, 2018 Full Collaborative Meeting
  • July 26, Monthly member briefing
  • August 23, Monthly member briefing
  • September 18, Work Stream 5 Meeting
  • September 27, Monthly member briefing
  • October 25, MSC Government Advisors meeting
  • November 1, Monthly member briefing
  • Workstream 5, non-performing loans meeting on November 27, 2018
  • Workstream 5, Servicing Compensation Meeting on November 30, 2018
  • Summary of December MSC Convening December 6, 2018
  • MSC News Coverage

  • How Does Securitization Affect Mortgage Servicing?

    Mortgage securitization also affects servicing. Most mortgages are securitized, meaning the loans are sold and pooled together to create a mortgage security that is traded in the capital markets for profit. Though these securitizations can take many different forms, they are generally referred to as mortgage-backed securities, or MBS.

    How are homeowners affected when their mortgages are securitized? Homeowners making timely mortgage payments don’t feel any effect if their mortgage is securitized. The homeowner just continues to make monthly payments to the servicer, although the entity servicing the loan may change when a loan is securitized.

    However, for homeowners who are struggling to make payments, the issue of who owns the loan matters. As discussed in our second video, the investor—or the owner of the loan—determines which assistance options are available to struggling homeowners. And each investor has different rules. For example, the rules on Fannie Mae and Freddie Mac loans are different than the rules on loans that are securitized through Ginnie Mae. In Ginnie Mae securities, the servicer must buy the loan out of a securitization before the borrower can be offered a loan modification. This makes it harder to offer a modification with an interest rate below that prevailing in the market. In securitizations with no government involvement, the specific contracts among the parties to the securitization govern the servicer’s loss mitigation toolkit.

    Before the housing crisis, loss mitigation options were harder to administer. As a result, more defaulted homeowners simply went into foreclosure. One of the legacies of the crisis has been the development of a more robust foreclosure prevention toolkit that servicers can use to help troubled homeowners stay in their homes.

    By promoting a robust and effective mortgage servicing sector, we can support homeowners and create wealth-building opportunities for a wide range of Americans.

    For additional information on mortgage servicing, visit these pages:

    1. What is mortgage servicing?
    2. Who is involved with mortgage servicing?
    3. What is default servicing?
    Research Areas Housing finance
    Policy Centers Housing Finance Policy Center