A Data Junkie’s Guide to Subsequent Recoveries

Happy Wednesday. Today we are sending out a lot of interesting data on subsequent recoveries. We are more than happy to walk you through any of it. Just email/call anytime.

Update from prior Commentary

In our November 25th, 2016 Commentary, we discussed how Ocwen, as master servicer, was applying the recovery of deferred debt to the wrong loan but fortunately in the same pool. This problem was widespread among all RFC deals where Ocwen is the master servicer. We contacted Ocwen and they replied on 12/27/2016 “Due to a system constraint on our end, the deferred balance was applied to a sister loan in the same deal. Starting in the December Loss File, I will be applying these balances to the correct loans.” We thought this meant that Ocwen would correct all the bad historical data, but we thought wrong. Only going forward, will they correct the problem.

Today’s commentary comes with an Excel spreadsheet which provides loan level and deal level data detailing the following issues we have uncovered regarding subsequent recoveries. These issues affect your cash flow. It’s your money and trustees and servicers owe you answers.

Suspicious Subsequent Recovery Analysis CWALT 2006-OA6, CWALT 2006-OA10 The change in scheduled balance appears to be the servicer recouping principal advances. However, the subsequent recovery makes no sense and in most cases, results in a negative cumulative loss. Seven examples are included. The cash may be fine but the application to the loan-level is definitely screwy. This is yet another example of how unreliable the loss severity statistics can be. Contact BNY Mellon and get an answer. This situation only applies to these two deals.
2nd Lien Deals - Subsequent Recovery Analysis on Charged-off / Liquidated Loans: 2016 – 2017 Loan Level data with Suspicious Activity highlighted Unusually high amount of subsequent recovery this month. Why? CWL 2006-S1, S4, S7, S8, S9 CWL 2007-S1, S2, S3 FFML 2007-FFA Subsequent recoveries just stopped across the entire deal? This is unusual. Why? CWL 2006-S10 FFML 2004-FFC HEMT 2007-2 FFML 2007-FFA Unusually high amount of subsequent loss this month. It may be related to the unusually high amount of subsequent recovery on other loans in the same deal, but why? CWL 2006-S1, S4, S7, S8, S9 CWL 2007-S1, S2, S3 Deal level summary data highlighting monthly recoveries (borrower payments) from Charged-off / Liquidated loans. The data shows there is money coming into the trusts from previously charged-off or liquidated loans. In some cases, properties in healthy markets such as California, have enough sale proceeds to pay off all the liens.
First Horizon - Suspicious Subsequent Recovery Analysis (either a correction or an error) Unusually high amount of subsequent recoveries this month on the FHAMS & FHASI shelves. Ask Nationstar why? It is either a mass correction or a mass error.
Losses Made Whole - Rep & Warranty Claims These are legitimate Rep & Warranty Claims made to Countrywide / BAC for Countrywide and First Franklin originations. No explanation needed.