Fannie Mae-No Politics (FNMA)

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Short Takes: Moody’s Worries About Servicing
Rising Costs Due to Forbearance
An NPL Non-QM Auction
In Forbearance by Mistake
A Big Loss For AG’s REIT

June 15, 2020 - Paul Muolo and Brandon Ivey -



It’s well known by now that originator profitability is through the roof these days, but what about the servicing side of the business ?

This from Moody’s: “The liquidity of non-bank mortgage companies, which we have long identified as a key sector weakness, will remain under pressure over the next several quarters, during which we expect the operating environment to remain challenging. Over the next several months, servicers will face a large increase in their servicer advance obligations because of the establishment of borrower-forbearance arrangements and rising delinquencies. Nonetheless, rated servicers should be able to meet their servicer advance obligations”…

Over the next 12 months it stands to reason that servicing costs will increase because of forbearance issues.

The big question: By how much ? It stands to reason that a subservicing vendor or two might arrive on the scene to handle processing headaches that others might not want to deal with…

MIAC Analytics, New York, is auctioning off a $6.4 million pool of non-performing non-QMs. “This is the tail of the pre-COVID-19 production,” the offering circular states. The weighted average coupon is 7.33%...

We’ve heard unconfirmed reports that in May some servicers automatically placed certain loans in forbearance without seeking approval from the borrowers. One mortgage official asked: “I wonder how many loans are in forbearance by mistake.”

IN CASE YOU MISSED IT: AG Mortgage Investment Trust reported a net loss of $490.7 million for the first quarter after earning $29.37 million in 4Q19. The real estate investment trust managed by Angelo, Gordon & Co. was battered by volatility from the coronavirus and sold a significant share of its investments at a loss in March and beyond. As of the end of May, the REIT had $45 million of cash on hand.