GMAC Restructures to Strengthen Subservicing Appeal

By the end of March, GMAC Mortgage Corp. said it plans to finish its year-and-a-half company restructuring process that will allow GMAC to better control risk and increase subservicing volume while using an integrated Internet platform managed by two separate default management departments and new leadership.

During this time, according to senior vice president of risk management for national loan administration, Bill McGuire, GMAC has been implementing its "Debt Servicing Utility" initiative designed "to bring together separate operations and separate organizations within GMAC."

The recent restructuring of the default management operations into two separate units, the "collections and loss mitigation" department and the "foreclosure and bankruptcy" department, along with the promotions of Mitch Oringer and Lionel Antunes as vice presidents reporting to Mr. McGuire, was part of this wider process.

"We had a first-mortgage residential servicing platform in operation, we had a second standalone customer loan servicing and home equity loan servicing platform organization, and we had a special servicing platform and organization," he said. "With subservicing sprinkled across all those platforms."

The initiative, he explained, takes "all the horsepower, intellectual capital, human and technological capital across the organization and merges it together."

"To our knowledge," he added, "nobody else in the industry has done this before."

He believes the new management structure enables GMAC "to rip the benefit of creating a low-cost servicing operation that is multifaceted." And finally, achieve another goal.

"The goal is to be able to have a service utility that allows for servicing of not only the GMAC products, but also to service or subservice products for others," he said. "Subservicing was a strong driver in implementing the company restructuring."

Moreover, executives expect its newly integrated technology platform to enable GMAC to service and subservice loans more competitively.

From a people- and company-restructuring standpoint, GMAC said it started its final phase at the end of January, migrating the loan mortgage portfolio into a new servicing platform. The creation of those two separate units was part of the evolution we have been going through.

During the final phase, separate technology systems that run GMAC platforms will be integrated together into one single platform.

Until recently, GMAC's first-mortgage platform used Excel's software, the customer platform operated on Shaw Software and special servicing on a system called Arsenal. The integrated platform will operate under the Fiserv mortgage service platform technology, with the customer platform converting by the end of March 2004, when restructuring will be completed.

Ultimately the converged system will lower operation and servicing costs by 20% to 26%, he said.

"Subservicing drives additional servicing-based revenue without spending additional capital for loan purchasing," he said. "It allows us to leverage our existing mortgage-owned portfolio, due to greater efficiencies created by the new integrated technology."

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