Connectivity Is King

Richard Kaye, president of Red Rock Servicing, Irvine, Calif., which serves as an asset manager and servicer of distressed assets, said his company’s experience in direct-to-consumer debt counseling paved the way for Red Rock to develop a short-sale and REO platform that can create economies of scale to alleviate the backlogs.

Most servicers lack a connected and intelligent platform for managing their growing asset management burden, he said. Because they rely on disparate data sources regarding REO and short sales, delays pile up as the distressed inventory grows.

Red Rock’s single system of record “provides scale at each pivot point or each disposition of the asset,” Kaye said.

Because foreclosure and REO disposition are more expensive for lenders and investors than short sales, Red Rock is focused on helping move borrowers that don’t qualify for a loan modification into short sales. By establishing communication with borrowers, Red Rock is able to obtain real-time data that help determine the optimal outcome for the lender, rather than relying on outdated data from a loan application that may be years old. The information is then fed into Red Rock’s analytics to examine likely disposition outcomes.

“Really what we’ve developed is a best-of-breed ecosystem with scale,” Kaye said. “This is something that has to be handled in a scale solution.”

Red Rock’s paperless platform can be used not only for analytics but for tracking all the parties involved in maintaining and selling a home, including real estate agents, title companies, and field service contractors that are hired to cut the grass and maintain the property.

“What that does is give us one broad system of record that allows us to track things down to the micro level,” Kaye said.

Kaye said Red Rock’s technology platform was built through collaboration with business partners, with the initial platform being derived from general loan origination software. From there, it was built to specifications determined by asset management clients.

Clients that assign defaulted loans to Red Rock can map data onto its workflow application from existing platforms used by many large lenders for tracking REO. Red Rock’s platform, which currently has 1,500 users not including real estate agents, features “application programming interfaces” to connect with the core systems used by servicers. Clients can also use the Red Rock platform independently.

The platform’s real-time, integrated nature will help lenders respond more quickly to sale offers, Kaye said, at a time when they are under increasing pressure to do so. Red Rock is in the process of developing an online offer management platform to make it easier for servicers and investors to respond quickly to offers made on a home. He said the company is undecided as to whether it will cloak to offer management platform and use it solely for assets under management by Red Rock or license it out to other asset managers as well.

“The gridlock and lack of performance by the current servicers out there is really setting the bar quite low,” he said.

Green River Capital, based in West Valley, Utah, has been focused on improving communication with its clients, according to Stephen Sherman, vice president of the company. GRC offers REO management and liquidation services. It also provides loss mitigation services, including short sales.

GRC has developed technology, REO Connect, which maps critical data from a lender’s system to its own proprietary software, using a “midsource” connection that allows clients to see information about the portfolios they have assigned to GRC.

Sherman believes clients need to be able to focus attention on “exception” properties that require special attention or immediate action. The platform’s dashboard can be customized to meet a client’s own criteria for identifying “exception” cases based on factors such as missed timelines or maintenance needs.

“As portfolios grow, it becomes more important that we develop tools like dashboards and exception reporting to identify the properties that might be the most challenging and pose the most risk,” Sherman said.

He also believes servicers need portals where the various parties involved in maintaining and selling distressed assets can connect together. This connectivity is especially important in the short-sale arena, where the homeowner is still involved in the process and participating in negotiations, he said.

The evolutions in REO technology extend to the field services arena, too, he noted. “We’ve been looking a lot at what technology is evolving in terms of the use of hand held devices,” he said, noting that realty brokers doing inspections or valuation estimates could upload data and photos to GRC directly from location in real time using devices like BlackBerries and other smartphones, rather than going back to the office to send information via e-mail and fax.

“A lot more can be done when we are working from one centralized system because the delivery of information is just so much quicker,” Sherman said.