Two $1 billion losses affecting private-label residential mortgage-backed securities that were taken due to a change in reporting methodologies as loans with principal forbearance changed hands may be the worst of these types of losses, according to Fitch.
Nationstar recently said it would
Moody’s and Fitch also have questioned Ocwen about one other large transfer involving servicing from GMAC. But although Ocwen said there are outstanding forborne amounts totaling $1.3 billion on this portfolio, Ocwen said it does not expect a similar revision of reporting on it.
Revisions had been made on the other portfolios because the companies said that the previous holders had not recognized some losses as suggested under Treasury’s 2010 guidance for HAMP loans.
According to Fitch, “Ocwen also said that similar loss revisions are unlikely in reporting forborne amounts for its recently announced acquisitions of the IndyMac Mortgage Services (a division of OneWest Bank FSB) and Greenpoint Mortgage portfolios.”
In addition, “Nationstar informed Fitch that there are no outstanding forborne amounts on the loans it is acquiring from Bank of America NA.”
According to Fitch, eight servicers have “indicated they have now reported all forbearance amounts as losses on modifications and will continue to report forbearance mods as losses at the time of modification.”
Another eight servicers have “unreported losses from principal forbearance modifications (aggregate amount of unrealized losses is roughly $300 million),” according to Fitch.
“Why these servicers have not or are not reporting principal forbearance amounts as losses at the time of modification is due to a different reporting strategy for HAMP and non-HAMP modifications.” Fitch analysts said in a report. “Another reason is that some servicers have forborne amounts from modifications from that were completed prior to the Treasury’s directive in June 2010.
“The servicers in the second group have indicated that they do not expect to reclassify and/or they will continue to follow the [pooling and servicing agreements]. If this is the case, outstanding forborne amounts will either be collected from the borrower upon payoff (as a balloon payment) or realized as a loss when the loan is liquidated from the trust at less than the full payoff amount.”
Fitch puts these servicers in the second group: Bayview Loan Servicing LLC, Caliber Home Loans Inc./Vericrest Financial Inc., Central Mortgage Co., Green Tree Servicing LLC, JPMorgan Chase Bank NA, PHH Mortgage Corp., PNC Bank NA, and Wells Fargo Home Mortgage, a division of Wells Fargo Bank NA.
The servicers Fitch names in the first group are Bank of America NA, Carrington Mortgage Services LLC, CitiMortgage Inc. (for securitized deals issued through the CMSI, CMALT, CRMSI, CFMSI and CMTI shelf registrations), EverBank FSA, IndyMac Mortgage Services, Residential Credit Solutions Inc., Select Portfolio Servicing Inc. and Specialized Loan Servicing LLC.
