Analysis Factors In Findings From Borrower Communication

Robert Shiller, senior vice president at Wingspan Portfolio Advisors

Minor adjustments in the approach to distressed property data analytics and communication with the homeowner may separate a foreclosure from a sustainable workout. The key is in considering all the data involved, including factors that are not strictly related to servicing and field services.

While crucial, information gathered on the ground is just the starting point to finding the best workout solution and making a final decision, says Robert Shiller, senior vice president at Wingspan Portfolio Advisors, a Dallas-based company that specializes in problem loans. In many cases the workout that made the most sense was quite different if findings from live, one-on-one conversations with the borrowers were factored into the decision making process, even though the servicer or the special servicer use “the same basic data,” he said.

Servicers need to aggregate the data reported by field service providers. Input from direct conversations with the borrowers help understand what steps they need to pursue to avoid foreclosure.

Investors prefer to avoid a foreclosure unless it is cost efficient, so finding innovative remedies that comply with investor guidelines and keep homeowners in the house makes a difference. “I would not call it psychological equity but their take on a specific property matters.”

The number of field service companies is multiplying. At the same time a growing number of firms that have been in the business for years are expanding their outreach by adding more services to the menu, bundling together property inspections, broker priced opinion valuations, door-knocking companies, in some cases even private investigators who help servicers locate borrowers.

For the big servicers who are using traditional processes it is very difficult to aggregate their data and all the vendor networks and identify the specific information they need to use, Shiller says, their biggest challenge today is to gather all the valuable information into one system that can easily convey the data to different branches of operations. It has been a challenge for many years because many companies cannot integrate their systems so easily.

Special servicers are very high touch servicers who are expected to take into account all the variables and characteristics present in the data gathered, he argues, so it is important to think outside the box when analyzing the data.

Wingspan is one example. The special servicer pack different types of field services into a single source that uses flexible technology to aggregate the data coming in from the field representatives into a centralized system of record.

The primary benefit, Shiller says, is the ability to analyze in coming data fast to identify risk, which is affected by many factors. The feedback takes into consideration vendor services, the analytical view coming from experts on the ground, and what Shiller calls “the soft skills of the actual contact with the homeowners,” all of which are rounded up into a servicer report.

All depends on the risk management approach. “Many large companies” are under the impression they have mastered how they identify the risk, he said, even though it often means they follow stereotypes.

For example, many banks see homes at under $50,000 as properties that have issues and as a rule turn into complete charge-offs so risk management means “not going down the foreclosure path because they are a dead deal.”

Shiller recalls cases where a full analytical review of such loans that the servicer expected to write off as losses received a workout instead. The centralized data system helps users to identify the risk and to prioritize the loss mitigation approach before starting a call campaign that ultimately helps discover the borrower’s intention on the property. The outcome can be “completely different” from the initial expectations, he said. Due to that approach on the data the servicer discovered which borrowers were interested in keeping the house and where was opportunity for some type of home retention.