Rise of the Rentals

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Th e M Rep o RT | 41 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 Billions of servicing rights Up for grabs MountainView divests another round of mortgage servicing rights. m ountainView Servic- ing Group recently advised the sale of another two mortgage servicing rights (MSR) portfolios, these possessing a combined unpaid principal bal- ance of $1.1 billion. The first portfolio, which went up for bid April 3, included $923 million of Freddie Mac servic- ing. According to MountainView, the offering featured 100 percent fixed-rate and first lien product with a weighted average original FICO score of 768, a weighted average original loan-to-value ratio of 72 percent, and no delin- quencies. The weighted average interest rate for the portfolio was 3.66 percent. "Over the last six months, we have marketed approximately 40 MSR portfolios consisting mainly of low-rate, conventional servic- ing," said Matt Maurer, manag- ing director at MountainView Servicing Group and the lead advisor on the sale. "But this may be the lowest-rate portfolio of them all, with its weighted aver- age 30-year fixed interest rate of 3.66 percent." The greatest concentration of loans in the portfolio was in California (35.1 percent), fol- lowed by Virginia (7 percent), Washington (5.4 percent), and Arizona (5.2 percent). The second offering was a $205 million Fannie Mae portfolio, which bid April 4. Quality features included 96 percent fixed-rate and 99.8 percent first lien product with a weighted average original loan- to-value ratio of 71 percent and a weighted average interest rate of 5.12 percent. Geographically, the portfolio was mostly concentrated in New York (81.4 percent), California (6.3 percent), New Jersey (4.7 percent), and Florida (2.5 percent). Oig: cFPB's supervisory activities need improvement More eyes are focused on tightening the agency. t he Office of Inspec- tor General (OIG) for the Federal Reserve System released the results of an audit performed on the Consumer Financial Protec- tion Bureau (CFPB) to assess the bureau's operational efficiency and effectiveness. The OIG noted the difficult task associated with the creation and implementation of the new agency; however, the OIG found that improvements could be made. "While we recognize the con- siderable efforts associated with the initial development and im- plementation of the program, we believe that CFPB can improve the efficiency and effectiveness of its supervisory activities," the OIG report said. Specifically, the report noted three areas of improvement for CFPB. First, the OIG recognized that CFPB needs to "improve its re- porting timeliness and reduce the number of examination reports that have not been issued." By its own reporting policy, regions have 30 days to submit draft examination reports to headquarters, allowing 30 days for headquarters to approve the draft and an additional five days to share the draft with the regulator or issue a final product. The OIG found 59 percent of 82 drafts submitted did not meet the CFPB's timeliness require- ment for submission within 30 days of fieldwork completion. Second, the OIG believes CFPB should "adhere to its unequivocal standards concerning the use of standard compliance rating defini- tions in its examination reports." The report noted, "The CFPB examination manual includes templates to help examiners across the regions produce consistent reports of examinations and supervisory letters." The OIG found two instances that deviated from the prescribed language, actions that "do not support the agency's commitment to consistency in the examination process." Finally, CFPB should "update its policies and procedures to reflect current practices," the OIG said. The examination reporting policy developed in June 2012 has not been updated to reflect reorganizations of the supervision offices in December 2012. Fieldwork for the OIG audit was completed in October 2013 using past data from July 2013. The CFPB responded and "indicated that management has taken various measures to address certain findings in our [the OIG] report, including streamlining the report review process and reducing the number of examination reports that have not been issued." The OIG offered 12 recommen- dations to CFPB to improve its processes including an update to relevant policies and procedures, as well as tracking and moni- toring of staffing examinations. Additionally, the OIG recom- mends CFPB finalize its exam- iner commissioning program. The OIG reported, "Management concurred with our recommendations and outlined actions that have been or will be taken to address our recommendations."

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