IMS Sees Growing Need for Property Protection
Collateral protection and preservation vendor Integrated Mortgage Solutions here has seen business from existing customers grow 25% this year, and given current industry default trends, the company expects even more growth going forward.
"It's going to continue through 2008 until all the ARM resents go through," said Cheryl Lang, president of the company. "We haven't hit the tip of the iceberg, and we aren't headed downhill yet."
She said the company is seeing 50% more abandoned properties than at the same time last year, and about half of those are for sale.
Low-downpayment borrowers, or those whose home value has fallen, often feel little incentive to call their loan servicer and see if a deal can be reached. She said they often are "not good stakeholders" because they have little financial incentive to try to keep the home or engage in a short sale.
That puts servicers in a tough spot, especially with housing markets becoming more difficult, servicing costs creeping up and loss severity rising on foreclosures.
"I think the best they can do to protect themselves and mitigate losses is to rely on their vendors. Get a reliable vendor," Ms. Lang said.
That creates challenges for maintaining and preserving the value of the property. And falling values also pose a risk, because it may make real estate agents that handle REO less likely to make sure the lawn is mowed and other routine maintenance gets taken care of if the agent thinks they are going to have trouble selling the property and getting paid.
She says vendors that provide collateral protection and other services can help loan servicers increase their contact rate with troubled borrowers, a key factor in making appropriate default management and loss mitigation decisions. By door knocking and canvassing neighbors, vendors can help lenders get in touch with borrowers and better assess their desire and ability to maintain ownership of the property.
Vendors, she says, can help lenders improve the communication gap that often opens up when borrowers start having trouble making payments.
The IMS strategy is to provide lenders with end-to-end collateral protection services, including loss draft, inspection and preservation, hazard claims processing, property repair work and consulting, on both performing and nonperforming loans. Ms. Lang said the company's technology platform, IMS Adapt, requires just a Web browser on the part of clients.
The platform is designed to facilitate its end-to-end suite of collateral protection services. And the company's exclusive focus is on the mortgage servicing industry.
Ms. Lang said IMS Adapt is customized to suit the needs of each client.
Among the features that set it apart, she said, is the use of Web phones that allow an inspector to upload reports and photographs wirelessly to the company's server, providing immediate access to the report.
She said IMS Adapt has four facets, each tailored to employees, clients, contractors or accounting. That means changes can be implemented to one user group without affecting other users.
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