A Union Between Servicers and Originators
DALLAS-Opportunities will emerge for mortgage products to be created outside of government lending to get borrowers into homes, anticipates one well-known mortgage executive.
In between sessions at SourceMedia's Mortgage Servicing Conference here, conference attendee Amy Brandt, the CEO of Vantium Capital Inc., the parent company of Acqura Loan Services and Strategic Recovery Group, discussed this opportunity with Mortgage Servicing News and shared her thoughts about the future of the overall mortgage market.
"It's a question of who finances that. There is no real market for any kind of securitization. There are not many players out there who are willing to put their balance sheets up that are not a bank," Brandt told MSN.
Brandt believes something will emerge and she thinks it will start at jumbo A. There are a lot of great analytical risk model arguments to be made that it's still good money, she said.
The market has a lot of high-balance homes out there where borrowers are making payments. These borrowers make the money to support the credit.
"We'll see how it evolves. People are trying a few things. Once the path to that is established, I think whatever market emerges, the ultimate investors are going to be much more savvy and critical from a risk perspective and will demand underwriting standards and servicing," said Brandt.
"That message is not lost on them. You not only need to have the underwriting standards in place to originate good credit, but you have to back that up with the right servicing practices to ensure performance on these assets. That entire story will be required to get a deal done."
Acqura is a servicer focused primarily on subperforming and nonperforming mortgage assets. Brandt, who was the CEO of WMC Mortgage Co. during that alternative-A lender's salad days, stresses that there is a real opportunity for change if some of the big institutions decide to sell off and allocate portions of their assets to special servicers.
"Clearly, the traditional form of servicing is not having a big enough impact. We need to get at the heart of it a little more aggressively. Things seem to be a little more positive, but I think there is still more pain to come. All of the writedowns and losses are still yet to be realized."
She believes servicers need to be more proactive in the way they monitor portfolios. It's about not waiting for that default to occur. It's important for servicers to look for changes in home prices and possible negative equity. They need to look for changes in consumer behavior, get in front of the default and have meaningful dialogue with the borrower. "Servicers must be more proactive in finding solutions," she said.
In the future, there will likely be some changing of roles and responsibilities within shops to make the mortgage market work, especially at the executive leadership level. Both the origination and servicing sides are going to be encouraged to be more collaborative, Brandt predicts.