Technology Gets Servicers Close to the Borrower
As defaults and foreclosures rise, the need for servicers to adjust how they do business is important. Servicers will have to get closer to the borrower and have all the needed information at their fingertips to deliver to that borrower over the phone in five minutes or less. Time is money and a borrower in distress doesn't make for a positive call, which means you have to get it right fast and on the first call.
"When you consider the numerous investor requirements, borrower demographics, all that has to be taken into consideration. The need to make the right decision at any moment in time is more critical in this market," stressed Don Morrison, CEO at Remend. "Over the last nine to 12 months we worked on asset valuation, risk monitoring, regulatory compliance, REO vendor management because a lot of that is outsourced, and expense control.
"We'll move into home and borrower retention next. We'll bring into the system the many investor considerations in handling a pre-foreclosure or delinquency. When the servicer is dealing with anywhere from 50 and up investors, it's a challenge to keep things straight.
"The better result comes when you're in a workout situation that is proactive," noted Mr. Morrison. "The servicer needs to amass a lot of information to talk with the borrower. You need to generate a complete net worth, a credit picture, etc., to get a full picture of the borrower. You want to do this without requiring much from the borrower, too. This all needs to happen in seconds.
"Second, you need to know the condition of the property and the loan. Does a foreclosure even make sense? You need to decide what is the best result for the borrower, the lender and the investor.
"Lastly, there are a lot of guidelines and terms that have to be understood to make a modification. Time is of the essence to get a positive outcome. So, you have use decisioning technology to give the counselor the right choices to give to the borrower. From there you need to provide the right documentation to reconfirm their circumstances, see their options, agree and do a follow-up call."
How has the workout process changed and how can technology help? "The decision trees were very well constructed by Fannie and Freddie, but now there are too many sources to comprehend anymore," answered Mr. Morrison. "The issue is there hasn't been a next-generation system to accommodate these changes in funding sources. Right now people are throwing people and labor at the problem.
"Technology needs to go direct to the borrower so they can purpose what they can handle to the lender. We'll pilot this technology starting October. We want to take uncertainty out of the process. For example, you want to see what the real LTV is. You also need the lender and investor rules baked into the system. It's about analytics and better communication in the end," he said. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com/