MBA: Servicing Fee Won’t Cut It; Fannie "Competing" with Purchase of MSRs From B of A

The Mortgage Bankers Association, in a new comment letter, strongly urges the government not to change the current GSE servicing compensation model, shooting down a FHFA proposal that would pay loan processors $10 per month for performing loans.

In a 42-page letter (including exhibits) dated Dec. 8 the trade group complains that FHFA’s proposal would be a step of moving “toward more government involvement” in housing finance at a time when the White House is trying to wean mortgage banking off of government support.

Moreover, the grade group – headed by former FHA chief David Stevens – complains that Fannie Mae’s recent purchase of $74 billion of MSRs from Bank of America puts the GSE in the position of being a direct competitor of private market servicers. (MBA does not name B of A in the letter, but according to National Mortgage News, the deal was consummated in the third quarter. No purchase price was ever disclosed.)

The Federal Housing Finance Agency regulates Fannie Mae and Freddie Mac, and serves as their conservator.

For well over a year now, the agency has been contemplating changing the current 25 basis point minimum servicing fee for GSE loans and is seeking public comment.

In September FHFA issued a “discussion paper” on the topic, offering just two models: a flat fee for service (FFS) and a 20 basis point payment with a five bp reserve.

To date, the agency has yet to offer any estimate on how much a servicer would be paid for processing troubled loans.

Over the past three years both GSEs have seized problem MSR portfolios because they were not pleased with the loss mitigation efforts of firms such as Flagstar and Bank of America.

Daily Briefing | Thursday, December 8, 2011

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  • Wells Fargo Continues its Dominance in the GNMA MBS Market

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  • Barclays: Cautious Outlook for Mortgage Credit

    Barclays Capital has a cautious outlook for both residential and commercial mortgage credit, its researchers indicated in their global outlook report Thursday.

  • Flood Insurance Extension Gets the Green Light From Senate

    The Senate this week passed a six-month extension of the National Flood Insurance Program and supporters are hopeful the House will act quickly to prevent any disruption in the issuance of new policies.

  • Delinquencies Down at MGIC

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    The average weekly 30-year mortgage rate for the sixth week in a row is not far from record lows and pretty close to 4%, according to Freddie Mac.

  • PHH Adds to Debt Offering

    PHH Corp., Mt. Laurel, N.J. has priced an add-on offering of $100 million of debt, to replace the $250 million debt offering it cancelled on Dec. 2 due to market conditions.

  • DOJ Names Bresnick to Head Financial Fraud Task Force

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  • Treasury Holding Up HAMP Payments to JPM, B of A

    After rating the performance of its top 10 HAMP servicers, the Treasury Department said JPMorgan Chase, and Bank of America need to make further improvements before they receive incentive payments from the government.

  • Consumers Still Pay the Credit Cards Bill Before the Mortgage

    The trend of U.S. credit cardholders putting credit card payments ahead of mortgage payments that began in early 2008 shows no sign of abating in the immediate future even as the economy gradually improves, TransUnion LLC analysts say.

Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_492/mba-servicing-fee-fannie-1027793-1.html

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