Some Nonbank Servicers Advance As Bankers Retreat

As commercial banks and thrifts continue to move away from the mortgage subservicing business, some, including Inside Mortgage Finance reporter John Bancroft, are wondering whether nonbanks are “strong enough to pick up the slack.” Bancroft posed the question in a story last week. IMF reported that depositories serviced $4.054 trillion in single family mortgages at the end of last year, down 2.04% from the third quarter of last year. RoundPoint Mortgage Servicing Chairman and CEO Kevin Brungardt offers an answer to that question: send the business to us.

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“The fear on the part of many, and it’s well founded, is that many of the nonbank servicers pursued growth before they had built a compliance infrastructure that would allow them to operate in the Dodd-Frank world,” Brungardt said. “RoundPoint did not make that mistake. We have a stable, compliant platform that will allow for our growth. As the banks move away from this business, as they should given the high cost of their compliance overhead, we are happy to step in and take it.”

In his story, Bancroft pointed out that banks have been retreating from the servicing business since 2009, when their combined portfolio was close to $6 trillion. That’s now down to less than one-third of that number. Unfortunately, the nonbank servicers that rushed in to scoop up much of that business did so prematurely, before they had the compliance infrastructure in place to handle it. Focusing on growth before they had built fully compliant operating platforms was the critical mistake virtually every nonbank servicer made coming out of the foreclosure crisis.

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“We didn’t put the cart before the horse,” Brungardt said. “That sets us apart now and makes it possible for us to grow without the risk that many of our peers now face.”

RoundPoint is a fully-licensed Agency and Non-Agency subservicer for commercial banks, credit unions, mortgage companies and hedge funds. RoundPoint currently services over $50 billion worth of mortgage assets, some of which it owns but the majority of which is subservices for loan originations nationwide. The firm provides a superior suite of end-to-end services, including loan boarding, escrow administration, cashiering, investor reporting, member services, and default management. Its leadership team works directly with investors to design a customized servicing approach that provides the best possible outcomes for borrowers.

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