An analysis of three of the fastest growing mortgage servicers finds that the firms have different priorities that garner different results.
In its distressed servicing business, Walter Investment Management Corp. places the focus on early resolution using its collector single point of contact model.
Tampa, Fla.-based Walter Investment handles its residential loan servicing through its Green Tree Servicing LLC subsidiary.
But within the operations of two rivals, Nationstar Mortgage LLC and Ocwen Financial Corp., the focus is on loss mitigation.
Those were some of the findings of a report released Friday from Moody’s Investors Service.
Ocwen’s efforts result in more re-modifications and principal forgiveness. Ocwen reportedly sees principal forgiveness as an effective tool to cut re-default rates on modifications.
Moody’s noted that Nationstar, which follows the guidelines of Fannie Mae and Freddie Mac as well as other investor guidelines, prefers principal forbearance over forgiveness and grants fewer re-modifications.
Walter Investment also follows GSE and investor guidelines for a more standardized loss mitigation process but has more frequent borrower contact — giving it better collections performance than the other two servicers.
“Nationstar’s NPV model projects the timing and costs of future events, incorporates re-default rates for modifications and projected home price changes, and is integrated with an independent review of valuations,” Moody’s said. “Walter, meanwhile, relies on the HAMP NPV guidelines, given that government-sponsored-enterprise loans constitute the majority of its servicing portfolio but also maintains proprietary models to meet non-GSE investor requirements.”
Ocwen relies heavily on using offshore employees, while both Ocwen and Nationstar maintain offshore sites. But Walter Investment does not.
