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.