The proliferation of mortgage delinquencies and new rules for handling mortgages proposed by the Consumer Financial Protection Bureau are combining to fuel a growing specialty servicer industry, CNBC reported.
Lending institutions can’t handle both the increased burden of more loans that require action and the rules that would require them to consider applications for help from borrowers with 30 days of reciept, so they’re calling on specialty servicers to help (see video above).
“There’s a finite amount of capacity in the servicing enterprise today, and the system by design was never set up to withstand these rates of delinquency, these high rates of foreclosure for an extended and protracted period of time” said Edward Delgado, COO of Texas-based servicer Wingspan Portfolio Advisors. Firms such as Wingspan, Nationstar and Ocwen are getting more business working closely with both banks and borrowers.
One deal to watch, according to CNBC, is CitiMortgage’s sale of $158 million in home loans to special servicer Carrington Capital, which plans to lease the properties out to troubled borrowers who turn over ownership. More similar deals could be on the way. [CNBC]