New federal rules target servicers

The FHFA has finalized rules restricting nonbank mortgage servicers

New federal rules target servicers
Federal officials on Wednesday finalized rules restricting loan servicers.

The new rules from Fannie Mae and Freddie Mac will create minimums for net worth, capital and liquidity, according to a MarketWatch report. The rules are aimed at nonbank servicers like Nationstar Mortgage Holdings and Ocwen Financial, and will “help ensure the safe and sound operation” of the GSEs, according to Federal Housing Finance Agency Director Mel Watt.

“Strengthened servicer counterparty standards should also improve access to credit and protect taxpayers by reducing market uncertainty about the enterprises’ expectations for mortgage servicer counterparties,” Watt said.

Nonbank servicers claim they can do a better job of collecting payments while also making a profit, according to MarketWatch. But several servicers – including Ocwen and Nationstar – have faced harsh criticism and occasional legal action over servicing blunders. And the Financial Oversight Council recently reported that nonbank servicing companies, which “have grown to account for a material portion of the mortgage servicing market,” could pose “potential financial stability risks.”

The new financial requirements will take effect Dec. 31.