Default Wars

These days being in the default servicing market is a lot like being the plumber of a rundown house. You are highly in demand and not sure if at all it is possible to fix every problem at hand.

Volume and scale are such that servicers are required to become creative in the way they process every case. They no longer are the collectors of the past but solution providers who are fighting the homeowner's foreclosure prevention wars.

South Carolina-based Titanium Solutions is doing just that using several types of approaches.Its newly created 350-seat centralized calling center contacts homeowners on behalf of lender and servicer clients. An army of 9,000 real estate professionals are on the ground knocking on people's doors. The company's CEO says this a highly efficient at-the-kitchen-table approach to default servicing.

Technology has allowed Titanium, along with many other mortgage service providers, to ensure fast loan processing, pre-approval and approval, which is key when facing the unprecedented volume.Keeping up to speed with changing legislation and scale of demand for loss mitigation products, Sterling Home Retention of Altamonte Springs, Fla., has completed the development of its new end-to-end platform Touch Point. The company says technology allows lenders to process two-to-three times the normal volume of loans without hiring new staff.

Many lenders are outsourcing to be able to stay at the top of the game. However, it is one thing to deal with a homeowner who cannot avoid defaulting on his loan and quite another to find a solution for those who choose to default. A study found that "strategic defaults" caused by homeowenrs "under water" are on the rise and posing a threat to the marketplace.It estimates that over 25% of all defaults are strategic, especially when the mortgage is at 15% higher than the current value of the home.

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