Servicers that handle securitized home loans are making progress in the sector even in an environment of compliance and regulatory challenges.
Servicers of loans that are included in residential mortgage-backed securities are mostly showing improvement in managing challenged portfolios.
The improvement among RMBS servicers is taking place despite an environment of increased compliance focus and enhanced regulatory scrutiny.
That is according to a report from Fitch Ratings.
But with the greater compliance and regulation comes a rise in the cost of servicing, the New York-based firm said.
Higher regulatory capital requirements also could become a factor — especially among smaller servicers.
“Additionally, more capital may be required to be set aside as rates rise and mortgage servicing rights values increase,” Fitch said. “Smaller servicers (many not rated by Fitch) may experience greater difficulty in the environment of rising costs and may begin to look to strategic alternatives.”
But despite the challenges, Fitch said that its ratings of servicers and their outlooks
are indicative of generally good performance and improved stability.
Of all the servicers rated by Fitch, nine percent
demonstrate superior performance in overall ability, with all areas of the organization operating at top efficiency and productivity.
Another 54 percent
show high overall performance, while 29 percent exhibit performance to a standard of proficiency in all areas.
Servicers that lack
proficiency due to a weakness in one or more areas of servicing ability or that demonstrate limited-to-no proficiency make up the remaining 37 percent.
