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Smaller Banks Picked up RMBS Slack in Q3

BankThe third quarter of 2017 saw many of the larger bank servicers scaling back their portfolios of residential mortgage-backed securities (RMBS), while smaller regional banks and non-bank servicers moved to seize the opportunity, as reported by Fitch Ratings’ latest RMBS servicer handbook.

According to Fitch, portfolios for the top bank servicers decreased by 1.6 percent during Q3 2017. These bank servicers include Wells Fargo, JPMorgan Chase Bank, Bank of America, and CitiMortgage Inc. Fitch also points out that Wells Fargo’s portfolio will also get a bump from their September 2017 purchase of servicing rights from Seneca Mortgage Servicing, for which Wells Fargo paid $51 million.

Among smaller regional bank servicers, Flagstar led the pack for portfolio growth in Q3, jumping up 4.7 percent. Just behind it was HomeStreet Bank (+4.4 percent), First Republic Bank (+3.6 percent), and PNC Mortgage Services (+2.2 percent).

Fitch reports that Nationstar Mortgage/Mr. Cooper grew by 7.6 percent, topping out at $494 billion in Q3. Of the 17 non-bank servicers Fitch rated during Q3 2017, 14 of them grew during the quarter, “by an aggregate of 6.3 percent.”

Of course, it wasn’t growth all around. Per Fitch’s RMBS data, Ocwen Loan Servicing saw its portfolio shrink to $181.6 billion during Q3, a drop of 3.9 percent. BSI Financial Services Inc.’s portfolio decreased by $1.2 billion to a total of $7.1 billion, and Statebridge Company’s portfolio totaled $1.9 million for Q3, a decrease of $70 million.

Fitch releases its U.S. RMBS Servicer Handbook every quarter. The Handbook includes “a description of all Fitch-rated servicers, their current servicer ratings and key rating drivers, portfolio size and key attributes, important trends, links to the full RMBS servicer reports, and Fitch analyst contact information.” You can see the latest Handbook by clicking here.

About Author: David Wharton

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