How home loan servicers should be compensated is a subject of intense debate in the mortgage industry today, as servicers have come under fire for their inaccessibility to homeowners and sloppy foreclosure-processing practices.
To fix the problems, the Federal Housing Finance Agency, or FHFA, has told Fannie Mae and Freddie Mac to work on proposals for alternative mortgage servicing structures and compensation. The proposals are to be coordinated with the regulators and the Department of Housing and Urban Development, or HUD.
Granted, loan servicers' compensation is a complicated issue. But the FHFA background paper, "Servicing Compensation Initiative pursuant to FHFA Directive in Coordination with HUD," issued this month, takes the complexity to a whole new level.
The 28-page paper contains a mind-boggling assortment of charts and diagrams in more than 16 different colors. In addition to black, gray and corporate blue, they've also used red, yellow, peach, neon orange, pastel green, bright green, turquoise, lavender, purple, pink, mauve and magenta.
The intrepid reader who isn't blinded by the color scheme must then confront the following charts, graphs and diagrams:
- Stakeholders and Objectives
- Servicing Market Volumes
- Performing Loan (PL) Activities
- Performing Loan Costs To Service Analysis
- Alternative Servicing Compensation Models from Past Industry Discussions
- Illustrative Lender/Servicer "Best Execution" Considerations
- Illustrative Model Comparison -- Mortgage Rate Setting
- Illustrative Current Model Originator Cash Flow & Accounting
And, that's just in the first 15 pages. By the way, the last item on that list contains eight boxes, 26 numbered lines and five arrows, and it's done in black, gray shading, peach and two hues of blue.
The brave soul who continues on will find more boxes, bar charts, diagrams, line arrows, orange, purple and yellow highlighting, line charts and a dizzying graph done in red, blue, purple and magenta.
Please, someone, take away the software, so we can try to understand the information.
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