Growth of mortgage services drawing attention from regulators
Monday, June 10, 2013 11:16 AM
Non-bank mortgage services are drawing the scrutiny of regulators and finance giants Fannie Mae and Freddie Mac, who want to avoid a repeat of the housing crisis, Reuters reported.
The seven largest non-bank mortgage servicers accounted for $1.4 trillion in mortgage servicing at the end of the first quarter, an increase of 69 percent in just three months, according to Inside Mortgage Finance. The total market is worth about $10 trillion, Reuters said.
The firms say they can handle the new business they are taking on and have added the systems and staff to cope. And many of the banks that are selling these operations have struggled with mortgage servicing; for example, they have lost paperwork and have improperly signed documents, and have agreed to pay out billions of dollars in settlements and homeowner relief linked to misconduct in the foreclosure process.
"We are very concerned about how these servicers are dealing with customers," said Leslie Peeler, head of Fannie Mae's national servicing organization.
State regulators and the Consumer Financial Protection Bureau, a relatively new federal agency that monitors mortgage servicing and other aspects of consumer banking, have also expressed concerns. Read more.