Mortgage Servicers Feeling The Pain As Mounting Mortgage Delinquencies Drain Cash Reserves

Bloomberg News reports:

• Bank of America Corp., GMAC LLC, and WL Ross & Co. are among mortgage servicers that have endured billions of dollars in unexpected costs and added thousands of workers to handle rising foreclosures, denting a business once viewed as a safe haven from the housing market’s collapse.

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• Servicers agree to advance cash to investors when borrowers are delinquent and get repaid when the loans are brought current or through foreclosure sales. [...] When late payments mount, servicers have to draw on their own reserves or credit lines until they conclude the loan won’t be repaid.

For more, see Mortgage Servicing Loses Luster as Bad Loans Mount.