Loan Servicers Feeling Heat From Scorched Mortgage Investors

Reuters reports:

• Mortgage investors, watching homeowners default on their loans in record numbers, are fighting back to limit the losses on their assets. Dire forecasts for the slump in the U.S. housing market have spurred investors to turn up scrutiny on the management of the loans they own, which can make the difference between profit and loss. What they are finding is companies overwhelmed by the volume of loans that need special attention due to delinquencies that show little signs of slowing.

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• Disillusioned, investors are looking for help or simply taking their business elsewhere. As a result, a breed of mortgage servicer that was out of the limelight during the housing boom is becoming more prominent. Known as "special servicers," the companies are geared toward taking bad loans and making them current, rather than the basic servicing business of collecting and distributing payments.

• This year Fannie Mae, the Washington-based mortgage finance giant that owns or guarantees $3 trillion in loans, has pulled loans from some servicers and handed them to others including Litton Loan Servicing LP. Marathon went a step further last year and started its own servicer.

For more, see Burned mortgage investors seek "high-touch" healers. MortgageServicingIssuesAlpha