With economists fearing high unemployment stemming from the pandemic, the housing finance system is grappling with how it will recoup lost revenue from delinquencies, forbearance plans and other tremors.
Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.
The pandemic has upended staffing plans, sparked concerns about servicers’ capacity to handle the expected crush of missed payments, and even raised questions about their ability to stay afloat.
Despite changes by the Federal Housing Administration, bankers remain reluctant to join the program for fear of legal liability. But that could change if it revamps servicing processes, experts say.
A report from the Financial Stability Oversight Council cited a bigger share of originations and servicing by nonbanks as a potential vulnerability in the financial system.
Financial regulators have been put on notice about the risk of an economically damaging cash crunch in the home mortgage market. Behind the concern: the rapid growth of shadow banks in the origination and servicing of home loans.
The San Francisco fintech company has agreed to pay a $110,000 fine for failing to comply with a 2017 state law that requires mortgage servicers to be licensed.
The Federal Housing Administration should monitor reverse mortgage servicers more closely and track related data that would shed light on a rise in defaults, according to a Government Accountability Office report.
