The Psychology Behind the Recovery

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Th e M Rep o RT | 45 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING the latest all is Well at Wells Mega-servicer finished 2013 at the head of the pack. t he Mortgage Bankers Association (MBA) released its year-end ranking of commer- cial and multifamily servicers' volumes—and once again, Wells Fargo topped the list. According to MBA's numbers, Wells Fargo took the No. 1 spot with $434.4 billion in dollar vol- ume and 33,354 in loan volume. While the dollar figure is up from the end of 2012, the number of loans was down from 35,215. The difference was made up in average loan size, which increased from $12.2 million in 2012 to $13 million in 2013. Following Wells Fargo were PNC Real Estate/Midland Loan Services ($369.6 billion, up from $337.6 billion the previous year) and Berkadia Commercial Mortgage ($235.4 billion, up from $197.3 billion). Also in the top five were Keybank, which moved up a slot to the No. 4 spot with $169.7 bil- lion, and GEMSA Loan Services, which moved up from No. 6 with $95.6 billion. Going by category, Wells Fargo, PNC, KeyBank, and Berkadia were last year's largest master and primary servicers of loans in commercial mortgage-backed se- curities, collateral debt obligations, and other asset-backed securities. PNC, Wells Fargo, and KeyBank were also among the top Fannie Mae/Freddie Mac servicers, along with GEMSA and Walker & Dunlop. Prudential Asset Resources ranked highest for Federal Housing Administration and Ginnie Mae loans, followed by PNC, Berkadia, Wells Fargo, and Red Mortgage Capital. Finally, MBA also asked firms to provide information on loans for which they are named as special servicer. The largest in that category last year were LNR Partners, C-III Asset Management, CWCapital Asset Management, PNC, and Prudential. borrowers, but for loans made to lower-quality borrowers, there is no obvious investor. That's why it's not working so far. There is some demand, but it's relatively small." Lending in this category may increase in a couple of years when lenders and servicers can see to what degree there is successful litigation concerning non-QM loans. This will give them a better idea of what the risk profile is. "In a transaction with a less affluent borrower, lenders are going to be much more reluctant to exceed those CFPB rules for the simple fact that they may be working for a $2,000 profit on a loan over its lifetime," Whalen said. "If they are sued in a juris- diction like California, they could end up with a settlement that is much higher. How many times is someone going to take that risk?" According to Whalen, it's going to be a few years into the future before non-QM loans are an investor preference. "They're go- ing to wait until they can better understand the risk in purchasing non-QM loans," he said. Nevertheless, Whalen said there are a lot of interesting dynamics in this market. "We are going to probably see a very strong market for non-conforming loans this year because there is still more than $200 billion in loans that have not been re- solved sitting on the books of the banks," he said. Whalen's predictions for the mortgage market in 2014: "I think loan volume numbers will con- tinue to slump through this year, and we will probably see home prices start to weaken as well. "In addition, I think we're going to see a lot of pressure on politicians and regulators to take another look at these rules because I think we have gone too far. These new rules are limiting credit availability at a time when we want to make credit grow in this economy so that we can generate jobs. Unfortunately, the current regulatory regime is going to stifle credit creation, and it's going to greatly limit access to mortgage credit for American consumers." Whalen closed his predictions with, "It's going to be a challenge going forward for some organiza- tions to stay in this market, be compliant, and as a result, be able to do business and do so profit- ably." The Five Star Institute and iServe Companies have partnered to create "Mortgage Markets Today," an in-depth, formal talk radio resource featuring expert guests, quality subject matter, and timely insights. The show delves into a vast array of topics ranging from the secondary market and federal compliance standards to real estate and mortgage lending. Investors, lenders, service providers, and all those interested in and affected by the mortgage and housing markets can tune in on the Web at or download audio podcasts of program broadcasts from iTunes. Disclosure: The Five Star Institute is the parent company of MReport new york regulator Halts Ocwen msr deal The company's latest bid to acquire rights from Wells Fargo is on indefinite hold. O cwen Financial Cor- poration announced that plans to purchase the mortgage servicing rights of a portfolio worth $39 billion from Wells Fargo Bank have been halted by the New York Department of Financial Services (NY DFS). The Wall Street Journal reports the deal was halted under allega- tions of abusive behavior toward homeowners, and the office of Benjamin Lawsky, superintendent of the New York regulator, has been investigating Ocwen since December 2012 over the alleged abuse, says a person familiar with the matter. The Atlanta-based business serves as a financial services holding company. In the press release, Ocwen said it "will continue to work closely with the NY DFS to re- solve its concerns about Ocwen's servicing portfolio growth." The transaction has been halted indefinitely, and any time- line for the completion of the deal remains undecided. "Under the new CFpB rules, about half the prospective homeowners in this country can't get a mortgage from a bank because the new laws have greatly restricted credit access." —Chris Whalen, Carrington Holding Company

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