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Wingspan Seeks to Help Turn Around Problem Portfolios

Carrollton, TX-Wingspan Portfolio Advisors, Carrollton, Texas, a mortgage servicing specialist, has opened its doors to assist lenders and servicers plagued by seriously delinquent loans. The service is aimed not only at mitigating losses but also at helping borrowers achieve full payment status, making their loans "reperforming" assets.

The company is led by servicing veteran Steven Horne, a lawyer who formerly served as director of servicing risk strategy at Fannie Mae. Mr. Horne also spent nine years as a partner with Sherman Financial Group. At Sherman, he built a unit that purchased and resolved portfolios of delinquent mortgage loans. He also served as director of default servicing for Ocwen, where he provided outsourcing services to Freddie Mac.

Mr. Horne said the company's mission is to give servicers, investors and other stakeholders, such as mortgage insurance firms, a fighting chance to save loans that otherwise would have gone to foreclosure. Mr. Horne said there are few specialists with the tools needed to cure nonperforming loans, and so many times lenders give up on these loans, especially those with little or no equity position. Wingspan has created a methodology that relies on data and analytic metrics to establish scenarios that offer hope to investors and borrowers alike, Mr. Horne said. "Our team of highly experienced and dedicated specialists understand that the ultimate value of a nonperforming mortgage does not depend exclusively on collateral value, but also on the borrower's psychology," Mr. Horne said.

Traditional loss mitigation systems analyze "net present value" scenarios, creating an assumption that loans outside the loss mitigation model cannot be saved. But that ignores "psychological equity," he said. Many borrowers have an interest in avoiding foreclosure even if they have little or no equity in the current market. Often, the borrowers lack an understanding of what could help them become current. "A lot of our strategies are geared toward the fact that borrowers are deeply uninformed about what their options are," Mr. Horne said.

Borrowers may want to catch up on their mortgage payments because of the social shame or stigma attached to foreclosure, the stress of moving a family, and the realization that if they lose a house, they will not be in a position to buy a new one anytime soon. "Every borrower on earth thinks their home is worth more than the bank thinks it is worth," Mr. Horne said.

Mr. Horne said the people at Wingspan think of themselves as the "investors' wingman," adding a layer of protection on defaulted loans. "We don't arrive at the decision that a loan is lost before we completely understand the situation," he said. Wingspan's specialists achieve 50% or more of their income by bringing loans back from the brink of foreclosure to paying status, which is key, because too often, traditional third-party servicers do not share any credit risk in a transaction and have little incentive to work on behalf of an investor to bring loans current. Wingspan's approach is to focus on returning loans to paying status, even if the borrower cannot bring the loan fully current in time.

Mr. Horne told MSN that the possible government bailout of bad debt and management of problem loans are unpopular, but many people forget Resolution Trust Corp., which managed the savings and loan debacle in the 1990s, actually finished its work in less time and for less cost to the taxpayers than many had expected.

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