Specialty Servicers Should Expect Large Transfers

Tailwinds should continue for specialty servicers in 2013, according to a report from FBR

As large, traditional servicers become unwilling to service certain asset that require more attention, FBR says it believes about $600 billion to $700 billion in ""high-touch, credit sensitive assets"" will eventually make their way into specialty servicing and sub-servicing sector.

FBR explained Fannie Mae and Freddie Mac will act as vehicles behind the transfer of assets to specialty servicers as the GSEs ""look to minimize losses from troubled mortgages.""

The report also stated, increased regulatory oversight on the servicing process will drive transfers.

The investment bank cited a report from the Federal Housing Finance Agency revealing Fannie Mae has about $300 billion in high-touch, credit-sensitive servicing that needs to be moved. Furthermore, FBR stated it believes Freddie Mac has about $200 billion and the Federal Housing Administration has $150 billion of agency paper.

This implies a total available UPB pool between $600 billion and $700 billion, which should be more than enough to support growth for the company's servicing business in the near term, the FBR report stated.

To date, FBR also says investors should expect some of the largest servicing transfers in the industry, and noted Nationstar Mortgage Holdings, Inc. and Walter Investment Management Corp. should benefit from the significant asset transition process.