Summary of December MSC Convening December 6, 2018

On December 6, 25 members of the Housing Finance Policy Center’s (HFPC) Mortgage Servicing Collaborative (MSC) met in person for the fourth time in Washington, DC, to discuss progress of the collaborative in 2018.  As part of the agenda, we discussed the status of the Servicing 101 education videos, next steps on uniform data standards, and took further intake from members on work stream 5 subcommittees on non-performing loans and servicing compensation.

  • Recap of 2018 MSC activities

HFPC staff recapped the activities of the MSC for 2018:

  • Released 4 research briefs.
  • Conducted eight monthly briefings.
  • One completed work stream and another in process.
  • Two in-person convenings and multiple subcommittee and committee work stream calls throughout the year.

MSC members discussed with HFPC staff Urban’s engagement with Capitol Hill on MSC research and recommendations, such as our meetings with staff to Ranking Member Waters, and meetings with government agencies such as Ginnie Mae. HFPC is planning to continue and engage government partners on MSC recommendations throughout 2019.

  • Update on servicing 101 videos

Progress continues with the production of three servicing 101 education white board videos. The video topics focus on what is mortgage servicing, who is involved with mortgage servicing, and default servicing. MSC members previewed one of the videos and reaction to the video was very positive.  Final production of the videos is under way and it is expected that the videos will be released in January 2019.

  • What’s next on uniform data standards

HFPC staff reviewed work stream 4’s research product titled, “The Case for Uniform Mortgage Servicing Data Standards.”  In general, MSC members are supportive of the research and recommendations in the report.  Some members cautioned that right now may not be the optimum time to establish data standards due to cost.  The recommendation is for an incremental approach, with industry and agency support and cooperation, to implement standards over time. 

  • Updates and further intake on work stream 5 subcommittees

At the meeting, progress on work stream 5 was the focus for the remainder of the agenda.  On November 27, the work stream 5 subcommittee on non-performing loans met to discuss two issues in focus for this subcommittee, both related to FHA’s loss mitigation toolkit, which are burdensome

documentation requirements and face-to-face interview requirements. At the subcommittee level, there was broad agreement that detailed expense documenting is a painful process for borrowers and is an expensive requirement for servicers to comply with.  MSC members at the convening agreed. On FHA face-to-face interview requirements, there was broad subcommittee agreement that this is a painful and antiquated requirement for both borrowers and servicers, and is expensive for servicers to comply with. MSC members at the convening agreed.  As a product from this subcommittee, HFPC staff is writing an UrbanWire blog and is expected to release it by mid-January, 2019.

The final topic of discussion was on work stream 5’s subcommittee on servicing compensation, which the subcommittee met on November 30.  HFPC staff noted that we do not expect consensus from members on a single option or solution to address servicing compensation.  It was reiterated that HFPC’s goal is to lay out the history of the debate and outline the options for addressing servicing compensation, which likely will include offering suggested frameworks to consider, with positives and negatives highlighted, in looking at incremental structural reforms to the system. There was broad agreement at the subcommittee level that there remains a high cost and burden to servicing non-performing loans. There was also concern raised by subcommittee members that the mortgage servicing industry is not building enough capacity to handle the next economic downturn. At the meeting, MSC members discussed several models for reform which include:

  • Keeping the system as is
  • Fee for servicing
  • A central utility

Next steps are to continue and conduct further research on the issue of servicing compensation, take in additional input from MSC members, and reconvene the subcommittee in January 2019 to finalize a framework for a research product to be released in late February or early March 2019.