Servicing Fiasco Ups Demand for Efficient Technology

The affidavits’ scandal and increasing demand for foreclosure documentation reviews requires greater efficiency from servicers, subservicers and specialty servicers alike, despite their procedural differences.

Duke Olrich, CEO of DRI, warns that working through the present crisis will not be possible without default management technology. “It’s not like the S&L crisis,” back in 1984 when he started DRI, the mortgage veteran says, because the much more complex tasks and “the sheer size of the current situation” overwhelm servicing staff to the point that workflow automation becomes indispensable.

No wonder the 97th MBA annual convention in Atlanta looked like a servicing technology vendors’ festival of new products and system updates.

Nearly four years in development, DRI’s default servicing system, Rincon, was designed from the ground up to be scalable and easily customizable for servicers without requiring big technology investments, Olrich says, which concerns many shops in need of “sweeping changes to basic servicing systems. “We’ve built Rincon with that in mind,” Olrich says. “It implements in a matter of weeks and that keeps costs and organizational impact low.” Rincon helps primary servicers process a higher volume of loans.

“We needed additional speed, flexibility and customized features to support our growth,” says Steven Horne, founder of Wingspan Portfolio Advisors, a specialty servicer based in Carrollton, Texas. “Now with judicial foreclosure processes in turmoil across the country, we’re ready for the surging demand.”

Specialty servicers focused on bringing defaulting loans back from the brink of foreclosure by returning them to performing status or through short sale, depend on a combination of technology and high touch, he says. Rincon is helping automate more tasks and allows for a higher level of customization that frees valuable time loan resolution specialists can spend on quality calls with borrowers. “We’re hitting a lot of home runs.”

Southfield, Mich.-based GCC Servicing Systems is now offering Final Docs and Collateral Tracking products as standalone modules. GCC said it has expanded its G/SERV platform to enable lenders to customize the use of individual tools within it catering to market demand for cost effective system updates. Portions of the servicing platform can complement existing technology. Final Docs includes Collateral Tracking, which offers a detailed inventory management system.

GCC president Glenn Liebowitz says the goal was to use modules from the G/SERV servicing system on a stand-alone basis, following requests from mortgage bankers and servicers. “This should be especially helpful for mortgage bankers who are also their own custodians and for banks who offer document custodial services.”

G/SERV automates all aspects of loan servicing, including loan set-up, cash management, escrow and insurance administration, investor reporting and accounting, default management, and federal and state reporting.

ISGN of Bensalem, Pa., also focuses on end-to-end mortgage technology. At the MBA annual ISGN introduced a new product line that covers the wider spectrum of loan processing including loan audits, underwriting and loan modification reviews to foreclosure documentation.

Quality assurance and review is designed to assist servicers, mortgage insurers and investors prevent buybacks, reduce future legal expenses responding to servicers’ demand for quality control spikes in light of foreclosure issues.
“This foreclosure crisis will have a huge impact on the housing industry,” said EVP for ISGN, Chetan Patel. “If there is even a limited foreclosure moratorium and loan ownership is being challenged, the REO market is going to see a major slowdown” as buyers and investors will hesitate to purchase a property whose title is in question, “the ripple effect and implications are massive.”

Demand for third-party quality assurance for servicing processes has recently spiked, he said, since lenders and servicers review their internal processes. ISGN’s quality review services are standardized for consistency of process and carried out by trained staff.

Services include file-level and workflow audits, predictive analytics and portfolio surveillance that can be implemented as an on or off-site outsourced solution.

“Servicers are in dire need for third-party, independent quality assurance services” driven by fluctuations in volume, regulatory changes and market unpredictability, said Patel. “Modifications, short sales and foreclosures—are now central components of servicer operations, and the sheer volume of these activities can put a servicer at high risk of error and oversight.”