Fitch: U.S. Banks Trimming Mortgage Servicing Staff as Performance Improves

Fitch Ratings, New York, said U.S. bank mortgage servicers have cut the number of full-time mortgage servicing employees by half from two years ago as portfolio sizes decline and loan performance improves.

The agency’s quarterly U.S. RMBS Servicer Handbook noted the average number of full-time mortgage servicing employees at banks fell to 4,000 in the second quarter from 8,000 two years ago. The number of nonbank mortgage servicing employees has remained fairly stable at close to 2,000 over the same period.

Fitch Managing Director Roelof Slump said nonbank servicers continue to focus on servicing growth. “[Their] borrowers generally still require more frequent interaction, driving their need for robust staffing,” he said.

The report said in addition to lower mortgage delinquencies, high credit quality portfolio additions mostly brought on by origination activity are also contributing to reduced staff among bank servicers. “Bank servicers now manage more than twice as many mortgage loans per employee compared to nonbank servicers, a comparison not likely to change to any great degree anytime soon,” the report said.

Other report highlights:
–Banks have been more active than nonbanks in offering repayment plans while their use of loan modifications has grown;

–Loan modifications are still the most prevalent form of loss mitigation for nonbank servicers and are being used 15-20 percent more frequently than bank servicers;

–Short sales are still playing a meaningful part in mortgage servicing; encompassing 14 percent of bank loss mitigations and 19 percent of non-bank loss mitigations as of the second quarter.