Vendor Says Default Business Rules Tech Improves Accuracy, Speed of Foreclosures

A new business process management software creates rules and checklists for servicers to ensure the cases they take to foreclosure meet compliance guidelines—technology that developer Pegasystems says protects servicers and lien holders from faulty foreclosure processes and speeds up the time it takes a property to transfer to real estate owned status.

The Cambridge, Mass.-based company developed the technology, called the Pre-Foreclosure Solution, for a large servicing operation. It’s based on Pega’s Loan Loss Mitigation Solution and essentially runs on top of an operation’s existing servicing software, dictating workflow and implementing rules to ensure the correct process and steps are followed in loss mitigation cases.

The new technology takes that a step further, and with a series of servicer-specific checkpoints, can certify that preforeclosure cases meet the firm’s requirements as well as local and federal regulations.

The loss mitigation software uses rules designed from federal policies, like the Home Affordable Modification Program. The preforeclosure software can be customized based on the states where a servicer operates, ensuring that specific foreclosure laws are followed.

“One of the things we’re good at is versioning and specialization,” said Tony Young, principal of financial services industry solutions at Pegasystems. “The technology is designed with a hierarchy and you can dictate different business rules that apply for each case depending on which state it is in.”

The software relies on an integration with the servicer’s primary technology platform to connect to all the subordinate software products an operation uses, like collections, loan modification, short sale and foreclosure. When a case gets to the point where loss mitigation is unsuccessful and foreclosure is inevitable, the Pega software runs a series of checks, working backwards to make sure every step and requirement was met before the case moves forward to foreclosure. If it catches a mistake or error, the system routes the case to an employee for review. Once a case is certified, the software can generate a report that provides an audit trail of the case.

That audit report can be used by servicer employees who sign foreclosure affidavits on behalf of servicers. Those employees have been accused of certifying foreclosures without reviewing the necessary documentation. The audit reports provide a way for servicers to review pertinent information from individual cases in an efficient manner.

That accuracy is important when it comes to processing foreclosures and getting properties through the REO process and sold.

This software is the third business process management technology that Pegasystems has created. In addition to the loss mitigation and preforeclosure technology, the company also offers an origination BPM service that uses connects to the various software products used in mortgage originations and dictates rules and workflow.

“Looking at the foreclosure crisis and the descriptions of what was going wrong, it seemed like a problem of legacy systems that weren’t able to keep up with volume and an issue of not being able to keep steps and rules in order,” Young said, adding that the rules system provides efficiency and accuracy. “So when you go into foreclosure you know you have everything right and it will stand up in a court of law.”