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Outsourcing of labor amongst mortgage servicers may cause problems for the private-label residential mortgage-backed securities market, according to Fitch Ratings.
In its latest monthly report on the RMBS market the ratings agency said that nonbank mortgage servicers have increased their use of offshore labor, primarily in India and the Philippines, countries with major English-speaking populations but low work wages.
Non-investment-grade servicers may be putting themselves at risk for major disruption due to the practice, the company’s report warned.
“Staff turnover” at offshore sites “can be higher than what is found among U.S. servicing staff, which creates challenges, especially for servicing portfolios that contain a high percentage of delinquent and defaulted loans,” Fitch’s managing director Roelof Slump said in a press release.