For default mortgage servicers, loans insured by the Federal Housing Administration offer the best potential for portfolio growth during the next couple years, according to a recent survey.
Although the Department of Housing and Urban Development reports FHA-insured loans accounted for just 17 percent of last year’s originations, they make up 35 percent of all loans past due at least 30 days.
So as FHA endorsement volume increases, the potential for an increase in the amount of default assets
will also expand.
Those findings were derived from the inaugural Default Servicing Survey from Altisource Portfolio Solutions S.A., which surveyed
205 mortgage default servicing professionals during June for the report.
Altisource said that 71 percent of those surveyed predicted that FHA mortgages and loans guaranteed by the Department of Veterans Affairs will account for a growing share of their
portfolios over the next 12 to 24 months.
FHA loans will offer the most potential for portfolio growth over the same time period, according to 41 percent.
Altisource noted that 93 percent of those surveyed said
foreclosure/trustee and claims-without-conveyance-of-title capabilities are important factors when evaluating a vendor to manage growing default portfolios.
But
remitting fees, costs and financial obligations associated with FHA conveyance are the greatest challenge, according to 29 percent.
“In order to overcome the financial, regulatory and oversight challenges associated with their vendors’ claims-without-conveyance-of-title programs, servicers must carefully evaluate their third-party vendor strategy to ensure vendors possess the right expertise and resources to execute the program,”
the report stated.
Altisource indicated that nearly
all of the survey participants said they are exploring options including a single-vendor approach to help achieve their objectives.