Ginnie Mae, the government-owned corporation that guarantees securities backed by government-insured mortgages, expressed concerns about the evolution of the servicing market to include more nonbank servicers.
In a white paper, Ginnie Mae noted that regulatory pressure — for instance, the punitive Basel III treatment of mortgage servicing rights — and “enormous retroactive costs” are increasingly causing banks to forego servicing. The company said that banks’ share of servicing single-family Ginnie Mae MBS issuances fell from 87% in 2011 to 56% in 2014. “Decreased levels of participatory interest of some of the largest and strongest residential finance firms is not a welcome development,” it said.
The rise of nonbank servicers of loans in Ginnie Mae MBS will require the company to strengthen its standards to accommodate “the substantially greater risks associated with this trend,” Ginnie Mae added.
Read the white paper.