Friday, April 4, 2008

Technology Boosts Default Management

MBA (3/24/2008 ) Palaparty, Vijay
DALLAS—Technological advances and new strategies have driven innovation in loss mitigation and default management. Panelists here at the Mortgage Bankers Association’s National Technology in Mortgage Banking Conference & Expo said technology gives servicers more opportunities to better keep borrowers afloat or in finding alternatives.
Steve Kadel, director of default products at ISGN, Bensalem, Pa., said demand for real-time data integrations is high, emphasizing the importance of data in both loan scoring and risk assessment methodologies.

“Prioritize loans based on risk and workout success potential,” Kadel said. “Evaluating workout options based upon delegated authority and working out the ‘low-hanging fruit’ first will also benefit servicers.”

Connecting data sources and scoring—including areas of credit, valuation and loss severity—is important in servicing, Kadel said. “Data is number one,” he said. “Processes are detail-oriented and consistency in data and having measurable data creates a systematic process.”

Rich Rollins, president and CEO of Jacksonville, Fla.-based National Quick Sale, said short sales provide opportunities for borrowers who are not able to stay in their homes.

“If borrowers are not able to stay in their homes, they have the option of short sale. However, the short sale process could be more efficient,” Rollins said. “Short sales are under-utilized as a viable alternative to foreclosure. They reduce risk and potential exposure of 40 percent to 60 percent in loss severity.”

Historically, the short sale process has been manual and disparate with difficulty in collecting borrower data and forms, making it labor intensive, Rollins said. Furthermore, he said it was a time consuming process of 60 days to 90 days, losing potential buyers in such a lengthy span of time.

“Short sales today are more automated and outsourced,” Rollins said. “Web-based solutions such as realtor registration and offer submission, offer management in integrating data, valuation and analytics and communication and dashboards to track the entire short sale via the web can significantly improve the process.”

Rollins’ company provides a web-based tool for short sales. “Given the default volume this industry is facing, short sales need technology to become an effective loss mitigation tool,” he said. “Technology, including workflow, business rules and document imaging with experienced intellectual capital can make the difference between success and failure.”

The industry also has high amounts of real estate-owned properties as foreclosure numbers escalate. “The inventory of homes is swelling daily,” Rollins said. “Vacant homes are a magnet for crime and damage, burglary, fire and so forth. There is a large problem in keeping realtors and property preservation companies accountable for showing and maintaining the home.”

Rollins said technology could help change the REO landscape with the ability to monitor properties through a stealth device such as the one his company, REO Sentinel, recently launched. The device monitors smoke, water leaks, gases and unauthorized entry via the web. Additionally, it would capture motion-activated photos and alert the owner and police by phone. Overall, it would oversee REO portfolio through web-based dashboard.

No comments: