Is Outsourced Servicing Really Cheaper? (Servicing‪)‬

Last year was a whirlwind for servicers. Record numbers of homes entered into default and foreclosure statistics were front-page news across the country. Servicers were busier than ever analyzing portfolios, working on loan modifications and dealing with buybacks. How busy were they? The Federal Deposit Insurance Corporation (FDIC) reported that banks had to buy back $7.1 billion in defaulted single-family loans during the third quarter of 2009. On top of that, new programs, such as the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP), were made available to help keep borrowers in their homes. Late in the year, the Treasury Department increased the pressure on servicers by announcing the establishment of the Homeownership Preservation Office to encourage servicers to move more borrowers into permanent modifications using the threat of fines or sanctions.