Servicers Ramping Up on Loss Mit Hires

Servicing shops are seeing a dramatic increase in new hires and loss mitigation training in order to handle capacity issues. This is what speakers said on the panel, “In the Trenches – What’s Working & What’s Not,” at the SourceMedia Best Practices in Loss Mitigation Conference in Dallas.

Stephanie Lowe, vice president, special servicing loss mitigation, GMAC Financial Services, said her company has added over 500 employees and developed a technology system in-house to deal with bulk decisions.

There is no shortage of excellent originators who have the skill set to deal with delinquent borrowers, and servicers are capitalizing on that talent pool, added Scott Gillen, vice president, Stewart Lender Services. Many shops are migrating large numbers of staff from other products, including in-house processors, to early stages of default. These employees are being trained while the companies work on technology advancements.

“A lot of re-tasking is being done, especially now that refis have leveled off a bit,” said Mr. Gillen. “No one wants to let anyone go.”

The panelists touched on the fact that borrowers need to be educated more on what documents need to be included under the Home Affordable Modification Program. In today’s market, a lot of borrowers are leaving out certain financial information because they are afraid. “We have to work on the psyche of the borrower. They need to be active participants and know we are not out to get them,” said Mr. Gillen.

While capacity is a huge issue, it appears that servicers are focusing a great deal of their efforts on borrowers who are current but could go into default. If a current borrower calls in who is in financial difficulty or who is struggling to make a payment, that is the borrower the servicer needs to stay connected with, said speakers at the show. It is imperative that servicers learn more about the borrower’s financials and challenges in order to find the right remedy sooner. As the account gets more delinquent, borrowers stop calling their servicers following as early as the 30-day period.

In terms of foreclosures and real estate owned assets, Rob Bridges, general counsel and vice president of operations at the auction firm of Williams & Williams, said the company’s clients are expecting to see a dramatic increase in REO in August, September, October, November and December through the first quarter of 2010.

A couple of large asset managers and hedge funds are talking about buying large apartment complexes and moving the borrower out of their house and into the apartments so they can dispose of the REO asset quicker and easier. After talking to various conference attendees, it seems like the favorable idea of many lenders is to get folks into a lot of these vacant properties as renters. Buyers from other countries and on the East Coast are buying bank-owned properties in places like Florida where they can pick up something bigger that is affordable. While there does not seem to be any financing alternatives right now for first time buyers, on the national lending scene, FHA is lessening their restrictions to try and get more end-users rather than the investor buyer.