Executive Sees Focus Expanding Beyond Default Arena

Mortgage servicing conferences have long been dominated by a focus on loss mitigation, but that may be changing, if the recent Western States Loan Servicing Conference here is any indication. The conference, hosted by the California Mortgage Bankers Association, is an annual event.

In part, rising home values have afforded servicers the opportunity to expand their focus to other areas, the chairman of the conference said in an interview with Mortgage Servicing News. Especially in California, home price appreciation has allowed troubled borrowers to sell their home at a profit and pay off the loan, avoiding foreclosure.

Scott Lehrer, who's day job is senior vice president and servicing manager at First Mortgage Corp., Diamond Bar, Calif., said that many servicers are looking at new products and services, including reverse mortgage lending.

Reverse mortgage loans, which allow seniors to tap into their home equity to meet current cash needs, represent a growing market that lenders and servicers can reach, Mr. Lehrer said.

"People are starting to recognize that there is untapped equity," he said. "And the reverse mortgages are going to become easier and easier to service."

He said that word of mouth among senior citizens is one factor driving up demand for reverse loans, also known as home-equity conversion mortgages.

Servicers are also paying attention to processes and technology that can reduce operating costs, he said.

Another trend that attracted attention at this year's conference was global outsourcing. Mr. Lehrer pointed out that outsourcing customer service operations to areas with low labor costs is nothing new. The reason companies moved customer service functions from places like California to states like Texas and Florida was to tap an educated but lower cost workforce, he said. Extending the trend overseas to countries like India, which is facilitated by technology that has sharply reduced the cost of international calling, is just a continuation of this long-running evolution within the industry.

Overall, he said mortgage servicers are seeing positive trends in the market this year. The average coupon on outstanding mortgages is lower than it has been in a long time, and servicing values are starting to rise as interest rates edge up.

And with the refinancing boom slowing down, lenders are focusing on ways to maximize the servicing contribution to profitability.

But one challenge facing the industry remains "predatory lending" litigation. Mr. Lehrer said servicers "cannot isolate themselves" from the issue, blaming it on loan originators.

Once the loan is on the books, it's the servicer that is going to receive calls about complaints or allegations involving the loan.

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