Two of the country’s biggest servicers of residential loans got low marks based on the volume of delinquent loans that were cured and cash flow from their loans. An emerging servicing giant has been modifying at a much faster pace than its peers.
Overall performance for all servicers of home loans deteriorated in the third quarter, Moody’s Investors Service reported in its Servicer Dashboard report. The decline was partly attributed to lower modification volume.
Foreclosure volume dropped off sharply in October 2010 with the onset of the robo-signing scandal. But volume is starting to recover, though the pace is still well below the level prior to October 2010.
Moody’s senior credit officer, William Fricke, noted that servicers have worked through the majority of delinquent mortgages and are now focusing on liquidation strategies including short sales and deeds in lieu of foreclosure.
Moody’ said that performance metrics at JPMorgan Chase & Co. and Bank of America Home Loans lag their peers.
JPMorgan serviced $1.1 trillion ad of Dec. 31, while BofA serviced $1.8 trillion.
“Chase and Bank of America are still facing an unprecedented volume of defaulted loans that they need to resolve, as well as regulatory scrutiny on several fronts,” Fricke explained in the report. “However, Moody’s notes that Chase and Wells Fargo decreased their foreclosure sale timelines significantly.”
Wells Fargo & Co. reported a total servicing portfolio of $1.8 trillion as of the end of last year.
The New York-based ratings agency noted that modified loan performance at Ocwen Financial Corp. indicates that the servicer is re-modifying loans at a busier pace than its peers.
Ocwen’s servicing portfolio was $0.1 trillion as of Sept. 30, 2011. That number is likely to reach $145 billion once the planned acquisition of Saxon Mortgage Services Inc. from Morgan Stanley is complete.
