Top Loan Servicers
Who sends your mortgage statement? Bank of America is #1 with $2.1 trillion (20% of the market). Wells is #2 with $1.8 trillion (17% of the market). Chase has $1.4 trillion for about 13% of the market, Citi has about $700 billion for a 6% market share, and GMAC/Ally has about $300 billion for 3% of the market. The next five are USB, SunTrust, PHH, OneWest Bank and PNC, all with less than $200 billion and all with less than a 2% market share. In total there is about $10.6 trillion of 1-4 unit servicing outstanding. These 10 companies have about 70% of all residential servicing.
FHA, Fannie, Freddie Positions On Foreclosures
The FHA’s stance on foreclosures came from it’s commissioner:
“I strongly urge every FHA-approved servicer to immediately conduct a full review of its servicing operations and procedures to ensure full compliance with all HUD requirements. HUD holds mortgagees accountable for their servicing practices in order to protect the public trust and the FHA Insurance Fund. FHA-approved servicers are obligated to comply with all applicable laws and regulations.”
“It seems like the borrowers who have claimed to be victims of ‘robosigning’ will still need to be dealt with individually, on a case by case basis, which tells me only time will heal this problem. It also means borrowers must be willing to work with servicers.”
There is general agreement that, in spite of potential documentation issues, over time foreclosures and short sales are an important mechanism to help normalize the housing market. Ownership is transferred to owners who have the ability to afford it, and sales reduce the amount of nonperforming loans held by banks. Banks are not in the business to own single family homes. In the past year, roughly 30-35% of home resales were either foreclosures or short sales. As a result, if these transactions are temporarily removed from the existing home sales tally, the volume of sales could drop precipitously.
What Is MERS and Why It Matters To Housing Market
JPMorgan Chase’s CEO caused a stir with the somewhat misleading announcement, carried through AP, that Chase has stopped using MERS after lawyers have argued in court proceedings that the system is unable to accurately prove ownership of mortgages. “The system lacks the required paper trail to prove mortgage ownership in foreclosure proceedings.” MERS released a statement in response. “JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them. JPMC has chosen to foreclose in their own name, which is a common decision that is allowed under the structure of MERS.”
Yesterday was a good day for both mortgages and stocks. In spite of a slightly-higher-than-normal volume day ($2.5 billion), MBS’s with lower coupons were better by .250 by the end of the day. Stocks rallied, although Treasury prices were about flat and the 10-yr closed at 2.43%. And prior to the 8:30AM EST numbers, that’s about where we were: unchanged.
This morning we’ve already had the monthly trade numbers and producer price numbers, and the weekly Jobless Claims number – which has seemed to become more important than the PPI. (Inflation is tame – it’s the job market that is the big concern.) The trade deficit came in at $46.3 billion for August. The PPI was +.4%, stronger than expected, but for those not using food & energy the number was +.1%, as expected. Jobless Claims went from 449k up to 462k, +13k. Although we still have a $13 billion 30-yr bond auction ahead of us, but the numbers this morning showed continued weakness in the jobs market with overtones of inflation and more dollar weakness. The yield on the 10-yr is sitting around 2.43%, and mortgage prices are roughly unchanged.