Should nonbank special servicers have more regulations?

[Barbara E.]

I've been reading a lot on housing wire, nasdaq, market watch, and mortgage orb, and it seems a big discussion occurring is whether or not nonbank servicers should have more regulations.

Here is what I learned

• nonbank special servicers wield $1.4 trillion in mortgage servicing rights out of a nearly $10 trillion market
• nonbanks use short-term financing to buy servicing rights for troubled mortgage loans that will likely not pay off until difficulties resolve in the long-term
• Infrastructures might not be able to handle the responsibility of servicing large volumes of mortgage loans
• 17% of the 30 largest mortgage servicers were not banks
• nonbank special servicers more susceptible to economic downturns that could increase nonperforming loans that require servicer loss mitigation
• nonbank servicers don't require same capital levels as a large bank lender
• reason for standards for banks was deposit insurance and the sense that IDIs could impose risks on taxpayers (not applicable to non-banks)
• A recent report from Fitch Ratings suggests rise of nonbank servicers threatens private-label residential mortgage-backed securitizations (nonbanks now service 74% of all private-label securities by loan count)
• higher risk to GSEs buying from nonbanks due to a counterparty that may default on financial obligations (representation and warranty obligations)

Elizabeth Warren, instrumental in formation of the CFPB is pushing for study on nonbank servicers.

I know there is a variety of different professionals on BP, and I'm trying to understand and, more importantly, weigh all the pros and cons and consequences that would occur if the FHFA were to impose stricter regulations on nonbank servicers.