Is the Fed's Settlement with Mortgage Servicers Good for the Market?


On January 7, 2013, the Office of the Comptroller of the Currency (OCC) and the U.S. Federal Reserve Board announced an $8.5 Billion settlement with 10 of the nation's top residential loan servicers ending independent foreclosure reviews mandated by enforcement actions.

Yesterday, Fitch Ratings reported its belief that the settlement is positive for those companies "as it is an end to the foreclosure review proceedings and will allow for a refocus on … completing other initiatives required by the various regulators, as well as to reassign internal staff that have been involved with the lengthy review process. In addition, the agreement makes the final compensation structure clear and eliminates further cost for the independent reviews that will allow the servicers to better establish their future cost to service and potentially allow funds to be released for improvements in the quality of their services."

However, several of the servicers are questioning their commitments to the U.S. residential market, and three of the 10 servicers who settled are no longer active in the market. Many have actively pursued a strategy to offload non-agency and, in some cases, higher risk agency portfolios to concentrate on new, low-risk products. Ongoing scrutiny of servicing practices appears to be intensifying, causing internal costs to mount and leaving many assessing the profitability of the servicing market in the face of such scrutiny.

To learn more about the terms of the settlement or how it may affect your servicing efforts, pricing structures, regulatory reviews and procedures, please contact Don Rea, Consumer Financial Services Partner, Saul Ewing LLP,, 410-332-8680.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Saul Ewing LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.