Three Firms Subservicing More Than $100B in Loans Each

For the first time, there is a subservicer, Cenlar FSB, handling the servicing function for more than $200 billion in mortgage loans.

In fact, there are now three subservicers with portfolios over $100 billion at the end of the second quarter, up from one company previously.

Cenlar remains the industry leader, with a 67% year-over-year growth in this area and a $216 billion portfolio, according to data collected by NMN's MortgageStats.com. But Black Knight Financial Services' LoanCare unit and PHH are also now subservicing more than $100 billion in loans. PHH recorded the third largest year-over-year increase on a percentage basis.

At the end of the first quarter, Cenlar subserviced $190 billion, PHH subserviced $97 billion and LoanCare $92 billion. At midyear, these three companies control approximately 35% of the subservicing market.

Cenlar first hit the $100 billion mark during the second quarter of 2012, according to MortgageStats.com.

Fitch Ratings has affirmed Cenlar's RPS2 (the second highest ranking) residential mortgage-backed securities servicer rating with a stable outlook.

"The affirmation and stable outlook reflect Cenlar's strong process and control environment, and its experienced staff and management team. Additionally, Cenlar has evidenced success in meeting its growth objectives while maintaining performance and quality standards," a Fitch press release said.

The release also pointed out that Cenlar "continues to hire experienced industry professionals in its servicing and management teams while making enhancements to its enterprise risk management structure through increased quality assurance and compliance testing."

M&T Mortgage had the largest percentage increase among the top 15 subservicers at 295%, followed by Flagstar at 228%.

Back in June, Flagstar Chief Operating Officer Lee Smith said at an investor conference, "Today we are servicing 370,000 loans. We would like to build that up to 1 million loans."

The growth in the subservicing portfolio includes $41 billion of servicing rights that Flagstar sold to an affiliate of Two Harbors Investment Corp. in an agreement announced late last year. The agreement called for Flagstar to subservice that portfolio.

On other hand, Ocwen slipped to ninth in the most recent rankings from second one year ago and saw its portfolio decrease by 58%, the largest year-over-year percentage decrease among the top 15.

The top 15 companies account for 72% of the total subservicing universe.