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November 2014 Remittance – Stop Advancing and JPMorgan Chase

Today’s Commentary: Is the sudden change in advancing an indication of a servicing transfer? YES Our research shows that a change in advancing is usually a sign of a servicing transfer. It takes a few to many months after the actual transfer for stop advancing changes to appear. Lately, stop advance rates have spiked in BAC serviced deals that had transferred over to Nationstar. That was not a surprise. This month, there are 119 JPMorgan Chase serviced deals (BALTA, BSABS, BSMF, CFLX, JPALT, JPMAC, SAMI) that experienced a significant increase in stop advancing on 60+ day delinquent loans. There are four possibilities as to the cause:

  1. Servicer reported bad data to Trustee (Servicer/Trustee issue)

  2. Chase has seriously altered their Stop Advancing policy

  3. Servicing transfer had occurred and new Servicer has truly stopped advancing (most likely – see evidence)

  4. Servicing transfer and a data reporting issue from new Servicer has caused bad data to be reported

We know our loan level data is accurate as it ties to the remittance statement. We had found proof that SPS had boarded Chase serviced loans prior to the RMBS Trust Settlement Agreement between Chase and Institutional Investors dated 11/15/2013. We also know that the Settlement Agreement and the Subservicing Protocol would require the transfer of seriously delinquent loans to sub-servicers such as SPS. Therefore, option #3 is most likely. The question is now “Why did advance rates change this month?”

Investors have the right to know who is servicing their deals. If SPS is now sub-servicing, in our opinion, the Trustees have the obligation to notify investors. The governing documents may not require it, but the Servicer is a basic fact that investors require to make sound investment decisions.

In addition, in order to track the effectiveness of a sub-servicing arrangement, investors need to know which loans had been transferred. Currently, investors have no means to make a valid judgment.

“All investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it.“

Contact us at 203-276-0672 to become a client and access all reports and attachments.

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