National Cooperative Bank is starting a conduit to purchase Federal Housing Administration-insured mortgages that are at least 60 days’ delinquent with the aim of turning them back into performing loans.
None of the loans are secured by co-operative properties, but the program is in line with NCB’s mission of providing affordable housing and keeping homeowners in their houses, according to the bank.
The new conduit will be an outlet for mortgage bankers who are seeking to transfer delinquent FHA loans out of their portfolio or off their warehouse lines in order to reduce delinquency servicing costs and claims processing.
“We expect that many of [the loans] are in Ginnie Mae pools. Ginnie Mae already allows for delinquent loans to be repurchased when they’re 90 days’ delinquent,” Bolger said.
The NCB conduit would be part of the defaulted loan repurchase process.
“The expectation is the current Ginnie Mae issuer would come to us for bids. And then if they like the bids, they would accept the bid and then make the repurchase. We’re expecting that they’re going to want to have an outlet for the loan and not just put it on their balance sheet,” Bolger said.
NCB plans to make more of an outreach effort, and provide more communication and counseling with mortgagors than other parties typically do.
“We expect we’re going to expend more time and effort on the servicing than they would traditionally get from a larger servicer,” added Bodell.