This is a great article below regarding the productivity and performance for the default servicing companies of non performing loans. It seems to be a direct correlation as to the limitations its competitors possess as a stronghold against who may purchase and how these bad assets may be purchased.
Banks that are under performing to servicers such as Ocwen, GMAC, and CitiMortgage are Bank of America and Fannie Mae. There is evidence pointing to strict guidelines aimed at preventing fraudulent transactions occurring on the resale of the property from investors as the cause to the decreased production of their REO department.
While intentions may be good, these limitations are deferring investors, the only purchasers capable and willing to buy properties in a distressed state, with cash.
Such limitations from Fannie Mae include a 15 day wait period for investors to present offers and a limitation of a re-sale price of more than 120% after the first 90 days of purchase. While investors struggle with the adjustment of Fannie Mae, They are presented with more stonewalling from Bank of America. BofA has completely limited the transfer of deed for all foreclosures for 90 days, period. This has got to be the exact reason for decreased productivity for BofA's REO re-sale department.
For now, investors are paying more attention to Banks with less restrictions and will continue to do so. It would be in the best interest of other banks to follow suit and release such outlandish restrictions before they are left with more shadow inventory creating a larger bubble ultimately causing an out of control downward spiral of bottoming out values of homes.......
Amid a challenging environment for servicers, CitiMortgage, GMAC, and Ocwen have outperformed major competitors – Bank of America and Chase – with regards to loss mitigation and foreclosure timelines, according to a recent report from Moody’s.
Moody’s Investor Service’s Servicer Dashboard for the second quarter of 2011 rates major servicers for their performance over the year from June 2010 to June 2011.
Bank of America’s and Chase’s performances were affected by large servicing acquisitions and foreclosure moratoria resulting from robo-signing investigations, according to Moody’s.
Moody’s Current to Worse Roll Rate measures the percentage of loans that start the year in current status and end the year delinquent, in default, or in foreclosure.
At 4.3 percent, CitiMortgage ranked best for Current to Worse Roll Rate for jumbo loans, a sign of their “working with imminently defaulting borrowers prior to delinquency and their use of short-term loss mitigation programs for borrowers in early stages of delinquency,” according to the report.
GMAC ranked first for both ALT-A and subprime loans, and Wells Fargo ranked second in Current to Worse Roll Rate for jumbo, ALT-A, and subprime loans.
“Wells has strong staffing ratios, allowing them to manage large volumes of loans and reduce the number of current loans that slip into distress,” states the report.
BofA ranked fourth for all three loan types, and Chase fell into last place for all three. The Current to Worse rates were highest for subprime loans – 25.8 percent of Chase’s current subprime loans were delinquent, in default, or in foreclosure, while 21.7 percent of BofA’s subprime loans fell into one of these categories by year-end.
Moody’s attributes these rankings to both bank’s servicing portfolio acquisitions.
In terms of curing default, Citi, GMAC, and Ocwen performed well. Moody’s notes that Citi and Ocwen both have their own default servicing systems with modification programs, which allow them to modify loans for more borrowers.
Moody’s also points to Ocwen’s and GMAC’s low modification re-default rates, which it attributes to the fact that these banks have consistently verified borrowers’ financial information before allowing them to enter trial modification periods.
As with Current to Worse rates, Chase and BofA showed a weak performance in loss mitigation.
Moody’s was not the first to note shortcomings in BofA’s and Chase’s loss mitigation efforts. When the Treasury scored servicers for their HAMP performance, the only two servicers categorized as needing “Substantial Improvement” for both the first and second quarters of this year were Chase and BofA.