Mortgage Servicing Research
Urban institute research on mortgage servicing:
In this brief, the fifth in a series prepared by HFPC researchers with support from the mortgage servicing collaborative, the authors examine three options for the mortgage servicing compensation structure: (1) retain the status quo, (2) move to a fee-for-service model, and (3) move to a central default utility model. The authors discuss the pros and cons of each scenario and assess how each option would perform under various conditions. The authors do not recommend a single option, but articulate considerations of each to help inform future policy discussions on mortgage servicing compensation. There are differing views on the issue, where some suggest servicing compensation must be changed to better align servicing costs and revenues for performing and nonperforming loans in a manner that will improve outcomes for servicers and consumers, while others believe that the present compensation model, coupled with post-crisis reforms and the recommendations from the previous MSC briefs, can promote an efficient servicing market with minimal risk of disruption.
Options for Reforming the Mortgage Servicing Compensation Model
In this brief, the fourth in a series prepared by HFPC researchers with support from the mortgage servicing collaborative, the authors discuss the benefits that would accrue to consumers and servicers if uniform data standards were adopted for exchanging mortgage servicing data. Standardization will increase data accuracy, lower the risk of data errors and the potential for consumer harm during servicing transfers, as well as help offset skyrocketing servicing costs. Standard data would also lay the foundation for game-changing innovations down the road. The authors view servicing data standards as a long term investment and urge all stakeholders to resume working towards it.
The Case for Uniform Mortgage Servicing Data Standards
In this brief, the third in a series prepared by HFPC researchers with support from the mortgage servicing collaborative, the authors address how the Federal Housing Administration (FHA) foreclosure and conveyance processes can be changed to bring down costs and create efficiencies. With proprietary data provided by Collaborative members, we explore foreclosure related costs and processes for FHA-insured loans. Specifically, we examine:
- How changes to the foreclosure timeline can increase efficiency; and
- How to improve the FHA conveyance process and reduce costs for the FHA, neighborhoods, consumers, and servicers.
The authors conclude that the current FHA foreclosure and property disposition processes result in avoidable delays, costs, and losses for HUD and servicers that are eventually passed on to neighborhoods and consumers in the form of depressed property values, neighborhood blight and reduced access to FHA credit for future borrowers.
Reforming the FHA’s Foreclosure and Conveyance Processes
In this report, the second in a series prepared by HFPC researchers with support from the mortgage servicing collaborative, we examine government loan modification products available for loans insured by the Federal Housing Administration (FHA), the US Department of Veterans Affairs (VA), and the US Department of Agriculture (USDA). We explore how FHA, VA, and USDA borrowers who fall behind on their payments are unlikely to receive adequate payment relief when the market interest rate is higher than the original note rate. We argue that, with some changes to the loan modification options at the FHA, VA, and USDA, current and future delinquent borrowers in rising interest rate environments could be better served.
Government Loan Modifications
The Mortgage Servicing Collaborative
Nonbank Servicer Regulation: New Capital and Liquidity Requirements Don't Offer Enough Loss Protection
This article examines the heightened and uncertain cost of servicing delinquent mortgage loans as a major contributor to the current excessively tight credit box. This is an update to the December 16, 2014 brief “Servicing Is an Underappreciated Constraint on Credit Access.” While the Federal Housing Finance Agency has made great strides in lowering the costs and reducing uncertainty for lenders, some further refinements are necessary. And servicing delinquent Federal Housing Administration loans presents an even greater challenge. To broaden access to credit, servicing issues are important and must be addressed.
This article was published in the February 2016 issue of Mortgage Banking.