Mood Glum on Recovery Prospects

Speakers at the California Mortgage Bankers Association's Western States Loan Servicing Conference were largely pessimistic about the prospects for a quick recovery in home values and loan performance, especially for the subprime mortgage sector.That means mortgage servicers will continue to face pressure as they manage rising delinquencies and foreclosures. "The eyes of the industry are really on us. We are in the throes of another cycle," said Scott Whittle, an attorney with Incal Associates, Los Angeles, who chaired the Las Vegas conference. William Leroy, head of the American Legal & Financial Network, said the industry has never before faced a time like the present. "It's going to be a wild ride over the next couple of years," he said. Mr. Leroy said he doesn't expect the market to recover before the end of 2009, as the industry struggles to contain fallout from weakening home prices and the reset of adjustable-rate loan products to higher payments. Michael Drawdy, senior vice president for home retention at Countrywide Home Loans, said his company is preparing for an increase in short sales as troubled borrowers struggle to find a way out of difficult options.