Non-Bank Mortgage Servicers Should Expect Increased Regulator Scrutiny
- Source: DSNews.com
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The current sentiment in the mortgage industry is that 2022 will see an increase in the number and depth of regulatory reviews performed throughout the year. According to Fitch ratings, non-bank mortgage servicers will also see the increase as pandemic-related government forbearance programs expire and borrowers become eligible for loss mitigation alternatives or continue to remain in default. According to Fitch, “The Consumer Finance Protection Bureau has prioritized mortgage servicing oversight under the new administration.”
Servicers may see the reintroduction of the Federal Housing Finance Agency’s (FHFA) net worth, liquidity and capital requirements.
Noted high-lights related to the COVID-19 pandemic since March 2020:
- 8 million homeowners enrolled in some sort of assistance;
- Nearly 6 million homeowners have successfully completed these programs; and
- These programs played a major role in keeping the 30-day delinquency transition rate down:
- The delinquency rate fell from 3.4% in April 2020 to 0.7% in October 2021;
- The national delinquency rate was 3.38% in December;
- Loans in active foreclosure were at an all-time low in December 2021;
- The rate of foreclosure stood at 0.24% with 4,100 foreclosure starts.
In the near term, Fitch is expecting foreclosure activity and the level of regulatory review to increase during the year.