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are questioning their commitments to the U.S. residential market, and three of the 10 servicers who settled are no longer active in the market.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, email@example.com, 410-332-8680.