Policy
Shawn Poynter / There Is More Work To Be Done
Shawn Poynter / There Is More Work To Be Done
HAC Comments on Proposal to Outsource USDA Single-Family Loan Servicing
USDA is collecting comments from stakeholders and potential vendors to take over a portion of the single-family loan servicing functions currently handled by the Servicing Office in St. Louis. The Servicing Office was established in 1996 in St. Louis, Missouri as part of USDA Rural Development’s national restructuring effort to centralize loan servicing functions. Over the last three decades, the office has become the core operational center for the single-family programs, managing more than 185,000 active loans and approximately $14.5 billion in outstanding debt. Comments and vendor proposals were due on July 16. HAC submitted comments opposing this privatization of single-family loan servicing. Our comments highlighted that:
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Servicing for this portfolio is unique due both to the structure of the loan products and the needs of the borrowers served. Any external vendor would have a steep and costly learning curve.
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Given these unique and complex servicing needs, cost savings of privatization are highly unlikely. Any anticipated cost savings need to be made public before this process moves forward.
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A better solution lies in adequately staffing the Servicing Office and upgrading its servicing technology.
HAC’s full comment can be viewed here:
