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44 | TH E M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Mitigating the Risks of Inefficient Servicing Servicing today is more complex, tightly regulated, and sophisticated than the precrisis servicing industry. Learn how to navigate these new waters. A report titled "Setting the Stage for Servicing Re- forms" released by the Urban Institute's Hous- ing Finance Policy Center (HPFC) last month has made a case for the importance of policy reforms in the mortgage servicing sector. The report reviewed how the mortgage industry has changed over time and explained the importance of the mortgage servicing industry to the overall housing market, as well as the significance of servicing to a wide variety of stakeholders. The report was released by HPFC's Mortgage Servicing Collaborative—a group consisting of lenders, servicers, consumer groups, civil rights leaders, re - searchers, and government—that was convened to develop a com- mon understanding of the biggest issues in mortgage servicing, their implications, and possible solu- tions, as well as policy options that can advance policy reforms for mortgage servicing. It touched upon the current mortgage servicing landscape, how it was before the 2008 housing crisis, and how it has changed after the Great Recession. The report pointed out the fact that although new rules put in place after the crisis increased standardization, they are not aligned among investors, leading to inefficient servicing. Making its case for policy reforms to increase efficiency in this sector, the report said that the costs of servicing mortgage loans have increased since the 2008 crisis. Citing an MBA survey of mortgage servicers, the report said that between 2008 and 2016, the per-loan cost of servicing a nonperforming loan, one that is either delinquent or in default, has almost quadrupled from $482 to $2,113. The cost of servicing a performing loan has also nearly tripled from $59 to $163. These increasing costs have a negative effect on all stakeholders such as consumers, mortgage servicers, federal regulators, insurers, guar - antors, and housing counselors the report said. The report indicated that the mortgage servicing industry today was much more complex, tightly regulated, and sophisticated than the pre-crisis servicing industry. With housing reform finance leg- islation once again in the works in Congress, now was the right time for service reforms. Fitch's Servicer Handbook Released Q3 2017 saw large bank servicers scaling back RMBS portfolios, according to a new report. T he third quarter of 2017 saw many of the larger bank servicers scaling back their portfolios of residential mortgage-backed securities (RMBS), while smaller regional banks and nonbank servicers moved to seize the opportunity, as reported by Fitch Ratings' latest RMBS Servicer Handbook. According to Fitch, portfolios for the top bank servicers de - creased by 1.6 percent during Q 3 2017. These bank servicers include Wells Fargo, JPMorgan Chase Bank, Bank of America, and CitiMortgage Inc. Fitch also points out that Wells Fargo's portfolio will also get a bump from their September 2017 purchase of servic - ing rights from Seneca Mortgage Servicing, for which Wells Fargo paid $51 million. Among smaller regional bank servicers, Flagstar led the pack for portfolio growth in Q 3, jumping up 4.7 percent. Just behind it was HomeStreet Bank (+4.4 percent), First Republic Bank (+3.6 percent), and PNC Mortgage Services (+2.2 percent). Fitch reports that Nationstar Mortgage/Mr. Cooper grew by 7.6 percent, topping out at $494 billion in Q 3. Of the 17 nonbank servicers Fitch rated during Q 3 2017, 14 of them grew during the quarter "by an aggregate of 6.3 percent." Of course, it wasn't growth all around. Per Fitch's RMBS data, Ocwen Loan Servicing saw its portfolio shrink to $181.6 billion dur - ing Q 3, a drop of 3.9 percent. BSI Financial Services Inc.'s portfolio decreased by $1.2 billion to a total of $7.1 billion, and Statebridge Company's portfolio totaled $1.9 million for Q 3, a decrease of $70 million. Fitch releases its U.S. RMBS Servicer Handbook every quarter. The Handbook includes "a description of all Fitch-rated servicers, their current servicer ratings and key rating drivers, portfolio size and key attributes, important trends, links to the full RMBS ser - vicer reports, and Fitch analyst contact information."