Mortgage servicers are handling 43 percent fewer loans than they were a year ago, though they are getting more out of each servicing employee. One of the ratings agencies is warning that servicers will face new threats next year.
The average mortgage servicing portfolio size as of Sept. 30 was 45,796 mortgages for $7.0 billion, based on the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report released Tuesday.
Third-quarter findings reflect data submitted by 161 independent mortgage servicers, bank subsidiaries and other non-depository institutions.
Servicers saw their portfolios diminish from the second quarter, when the average was 47,627 loans for $7.1 billion.
Average portfolios have tumbled from a year prior, when they were 80,862 mortgages for $10.4 billion.
For each full-time employee, the average firm serviced 839 loans — better than 799 three months earlier and 688 a year earlier.
Net servicing operating income per loan was $216, inching up from $213 in the second quarter and leaping from $183 at the same time last year. Total net servicing financial income swung to a $41 loss per loan from the second quarter’s $14 profit. At the same point during 2009, it was a $41 profit.
Moody’s Investors Service issued a report today that indicated scrutiny of irregularities in foreclosure documentation might lead to fresh controversies about additional servicing practices. The flaws will result in foreclosure timelines that are three months longer.
“In 2011, it will become evident how seriously courts will view violations of court rules on foreclosure procedures” Moody’s Analyst Gene Berman said. “Since judicial foreclosure laws vary as greatly from state to state as judicial foreclosures do from judge to judge, we could see a wide range of judicial opinions on the legality of the foreclosure processes and actions taken to remedy each situation.”
Also coming into focus next year could be the different practices servicers have in the way they make advances to investors, according to the ratings agency. Another potential issue is denied mortgage insurance claims resulting from servicing errors.
The full MBA report is available for purchase by calling 202.557.2830.
