“Ginnie Mae has halted the transfer of mortgage servicing rights from Bank of America (BAC) to a nonbank servicer because the bank is missing documents such as recorded mortgages and title policies on the underlying home loans.”
“Ted Tozer, the president of Ginnie Mae, says he has held up the transfer of servicing rights by B of A “for an extended period” because the bank is not complying with agency’s guidelines that require all mortgage documents be delivered to custodians in a timely manner.”
“Issues are coming up now because documents are missing,” Tozer said Tuesday. “It’s a new phenomenon with the major banks getting out of the servicing business. We don’t want to transfer the risk to a new servicer.”
“It is unclear how widespread the problem of missing documents is in the transfers of mortgage servicing, Tozer says, and he does not want to single out B of A.”
“I don’t mean to sound like we’re picking on B of A,” he says. “I can’t say if it’s just B of A or not.”
“Banks have been pulling back from the mortgage servicing business because they do not want to handle defaulted legacy loans from years past and because Basel III requirements make it expensive for them to hold servicing rights. Large banks have been selling portfolios to nonbank specialists like Ocwen (OCN) and Nationstar (NSM) – although those companies have recently had to slow down acquisitions due to regulatory scrutiny.”
Read full American Banker article here.