Issues of scale and how servicers are dealing with the gigantic volume of defaults and foreclosures may sound like old news the industry has grappled with. But unless every single borrower in distress is contacted, met face-to-face and reviewed from the personal finance perspective to ensure all the information is correct and filed, servicers could be in trouble themselves in the long run because those borrowers may redefault.
Special servicing, some veterans say, is the only viable solution when it comes to complying with a list of government, state and investor requirements servicers need to consider every step of the way. A list, that as time goes by, becomes longer and longer, bringing into the equation special servicers and the convenience of their services.
For example, some programs like the National Residential Property Receivership program introduced by Wingspan Portfolio Advisers is responding to specific issues of compliance related to the Protecting Tenants at Foreclosure Act. These new laws that are well intended in finding ways to protect tenants, at the same time significantly increase the potential risks related to servicing certain residential properties. Ocwen Financial is connecting borrowers with foreclosure prevention assistance using the Internet links.On the investor side, new tools that help ensure a more transparent data processing from loan origination to securitization also are emerging. The American Securitization Forum's tool is based on loan level data that benefits both investors and servicers of these securitized loans.