Little Change in Top Servicers in 2Q09 as Market Shrinks

There was virtually no change in the ranks of the nation’s top mortgage servicers in the second quarter as a combination of pay downs and foreclosure sales continued to reduce the total amount of servicing outstanding. According to a new ranking by Inside Mortgage Finance, Bank of America continued as the top servicer with $2.1 trillion in volume and a 19 percent market share as of June 30. Wells Fargo followed in second place with $1.8 trillion in servicing and a 16 percent market share, Chase rounded out the top three with $1.4 trillion and a 13 percent market share. Together, the top three accounted for nearly half of the $10.98 trillion in mortgages
outstanding in the U.S. as of the first half mark.

Top Servicers BofA and Wells Receive Low Grade in HAMP Scorecard

The mortgage servicing market’s two largest players–Bank of America and Wells Fargo–did not fare very well in the loan modification scorecard released by the Treasury Department yesterday. BofA, the top servicer at the end of the first half with more than $2.1 trillion and business and a 19 percent market share, received one of the lowest scores in the Treasury’s first report on the government’s Home Affordable Modification Program.

Only 4 percent of BofA’s potentially eligible borrowers received trial loan modifications under HAMP. Wells, the second largest servicer at the mid-year mark with $1.8 trillion in business and a 16 percent market share, didn’t fare much better. Some 6 percent of Wells borrowers in default have received trial loan modifications under HAMP. In defense of BofA’s and Wells’ low scores, the Treasury’s new report doesn’t capture non-HAMP loan modifications nor does it reflect other workout options that distressed borrowers may receive.

Largest Servicers to Explain Their Handling of Short Sales

The Obama administration is stepping up its efforts to promote short sales as part of its plan to help distressed homeowners avoid foreclosure. On August 18, representatives from the country’s two largest servicers–Bank of America and Wells Fargo–will outline their approaches for dealing with short sales at an audio conference from Campbell Surveys. The event– “Navigating the Short Sale Process: Learning from the Nation’s Largest Mortgage Servicers” –is aimed at helping real estate agents and others take advantage of the new opportunities to expedite short sales.

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Largest Banks Hold Most Second Mortgages, New Analysis Reveals

The biggest mortgage servicers in the country, who currently are grappling with how to deal with a flood of problem first mortgages, also happen to be the largest holders of second mortgages. According to new numbers compiled by Inside Mortgage Finance, some $211 billion in closed end second mortgages were held by banks and thrifts as of March 31, 2009.

Citigroup was the top holder of second mortgages with $33.9 billion in volume, followed by Bank of America ($33.2 billion), Wells Fargo ($24.6 billion) and JPMorgan Chase ($15.7 billion). The concentration of second mortgage holdings among the top four banks theoretically should make it easier to modify or otherwise deal with defaulted first mortgages that carry seconds. In practice, however, second mortgage holders have been reluctant to agree to workouts that reduce or wipe out their investments.

Major Mortgage Servicers Post Mixed Delinquency Results in 1Q09

The Inside Mortgage Finance Large Servicer Delinquency Index, a measure of the performance of the top mortgage servicers in the country, climbed to 9.1 percent in the first quarter of 2009. This was up from 8.5 percent in the fourth quarter and the highest level ever recorded by Inside Mortgage Finance. One positive development in the new numbers, which track the performance of $7.5 trillion in residential mortgages, is that the delinquency rate in loans less than 90 days past due actually fell in early 2009. Among the largest mortgage servicers in the country, Wells Fargo posted both the lowest total delinquency rate (6.82 percent) and the smallest increase between 4Q08 and 1Q09 (just .03 percent).

A complete look at the delinquency and foreclosure rates of the top servicers will be published in this week’s Inside Mortgage Finance.

Top Three Banks Now Account for Almost Half of All Mortgage Servicing

Thanks to a flurry of merger activity late last year, the top three banks in the country –Bank of America, Wells Fargo and JPMorgan Chase– now service nearly half of all mortgage loans. According to the latest ranking from Inside Mortgage Finance, the three firms together held a huge $5.4 trillion in mortgage servicing as of March 31, 2009. BofA was the top mortgage servicer with $2.1 trillion in volume, followed by Wells with $1.8 trillion and Chase with $1.5 trillion.