REO Disposition Success

Increasingly complex REO inventories complicated by ongoing market pressures and a more demanding regulatory environment are placing asset managers under significant pressure to compliantly reduce REO inventories, while minimizing portfolio losses. This REO environment will continue to drive the agendas of asset managers and their REO asset management partners as both work to improve and streamline REO disposition processes.

In these extreme market conditions, it has become increasingly difficult to sustain property-specific marketing strategies. Time constraints and sheer number of regulatory requirements reduce the focus on individual properties in favor of volume-driven approaches. Ironically, the resulting one-size-fits-all solutions have often had the opposite of their desired effect, leading to longer disposition cycles and lower selling prices.

To improve REO marketing and disposition results, stronger field execution is paramount. Servicers need to look for an REO asset manager with a nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties.

This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

Using a National REO company that has an army of local broker’s rather than an arm’s length National Broker with little to no local expertise, significantly enhances the asset manager’s return on property sales.

The local real estate agent has a better knowledge of prospective purchaser expectations, such as price in relations to neighborhood values based on past neighborhood sales and expected amenities which translate into a higher sales price and a quicker turnaround time.

A nationwide network that includes both local brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient and effective approach for each asset in the lender’s REO inventory.

In addition, field service companies must demonstrate the ability to handle both quantitative (volume) and qualitative (depth of service) market demands. Meeting this dual-track challenge requires a large, nationwide field service team? The key is rapid deployment of field resources on a neighborhood-by-neighborhood, property-by-property basis. Providers who can perform at this level are re-defining responsive REO service.

End-to-End Control

Asset managers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turnkey auction management or assigning a broker, as appropriate.

Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most important, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process – is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

Closing Services – Well-qualified REO asset management organizations can provide the people and expertise to coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information? All in strict accordance with client, legal and regulatory requirements. Title procurement, HUD-1 review and approval, escrow/closing coordination? These capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Understanding REO Disposition

With today’s increasingly complex REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies, particularly for low-value, high-risk properties, must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether large-scale bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

The Right REO Marketing Partner

With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre- and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turnkey auction management or assigning and managing a broker, as appropriate

The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including ongoing detailed progress reports.

Most important, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means, first, knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

Multifaceted Approach Key to REO Disposition

The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles: It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through evaluate and monitor property marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help lenders/servicers address these and other needs critical to REO asset marketing success.

Not All Networks are Created Equal

Field service network strength is an important predictor of REO program success. Certification and training are essential to assure that inspectors, contractors and other network members are properly qualified for the field services they provide.

This requirement favors REO service providers with permanent nationwide networks whose members are carefully screened and required to demonstrate ongoing adherence to strict industry licensing and performance standards. Providers whose field service teams are recruited on an as-needed, ad hoc basis may find it difficult to satisfy this requirement.

Dynamic Asset Management Technology 

To optimize their advantages, leading REO service providers incorporate advanced management technology into their programs, enabling servicers to monitor and evaluate every aspect of their REO program, as well as property pre-foreclosure events, with paperless, point-and-click convenience. Fully effective REO process management technology allows lenders and their service partners to organize and track all REO tasks and events; maintain communications with all parties in a real estate transaction; meet all regulatory and lender requirements, and assure a clear audit trail.

Technology can also improve on-the-ground performance and efficiency. For example, enabling contractors to enter critical data directly from the property location enables them to instantly verify property status.

The Future of Successful REO Disposition

Improving and streamlining default and REO processes will remain a primary focus of asset managers and their field services partners as the need for compliant REO marketing and disposition continues to grow as regulatory compliance becomes more urgent and complex.

Long-term success will favor REO service providers with integrated field service networks, innovative technology and broad-base expertise needed to deliver end-to-end REO solutions that optimize REO results.

About The Author


Quick-Response Technology

You Can Download This Article As A PDF HERE

joebadalamentThe financial services market is constantly changing at a disruptive pace. New rules and regulations are continually being introduced, market conditions are unceasingly fluctuating (foreclosures are increasing/decreasing, rates are rising, REO is in a state of flux) all putting intense pressure on servicers to effectively respond to these conditions. The changes are so rapid and far reaching they pose an immanent and substantive threat to businesses trying to navigate them. In these circumstances, time is the enemy: Technology solutions must be pursued with a heightened sense of urgency while avoiding unintended consequences and costly missteps. In a time of accelerated market and regulatory change, mortgage servicers can benefit from solutions that are:

>> Scalable and adaptive. New technology tools must be able to quickly scale up or down with respect to unexpected or unplanned variations in financial industry market conditions, user demand, business goals, database capacity, performance metrics, and the like.

>> Opportunity based. Technology tools must be carefully matched to risk assessment, operational change, financial industry market conditions and productivity deficits. The question to ask is how does the technology address current industry conditions and how flexible is the technology in adapting to future industry changes?

>> Task focused. Effective quick-response technology solutions are solution focused, minimally disruptive, intuitive and provide an enhanced user experience. Think specific solutions that respond to current market conditions (vacant property registration, municipal code compliance, REO management, ETC,).

>> Compatible and complementary. Overall system coherence must be preserved. New technology tools must integrate smoothly with legacy platforms and existing technology and servicing ecosystems.

>> Operationally integrated.  New technology tools must provide seamless support for existing processes, new regulatory requirements and functional responsibilities shared across internal and external user groups.

The Right Delivery Model

When speed is an overriding issue, delivery model is important. Software as a Service (SaaS) and other cloud computing models provide applications over a network (usually the Internet). By their nature, Cloud solutions offer infrastructure flexibility, faster solutions deployment, improved cost control, immediate-needs matching, and improved productivity across the enterprise. The most important benefits:

Rapid Response

SaaS applications are a smart choice for servicers under pressure to respond quickly to market and regulatory change. Companies can start using these applications in days, rather than months so that they can efficiently and effectively respond to regulatory changes and avoid costly penalties and potential fines.

Lower Costs

SaaS applications typically bundle the management of software, network and data center into a single offering paid for through recurring charges over time rather than outright purchase. As a result, companies experience lower investment and implementation costs, as well as shorter learning curves. In addition, frequent updates are the norm, including regulatory requirements and changes, minimizing strained internal IT resources. In some cases, an application may be a value added service of the provider, delivered at no direct cost to the user.

Faster Deployment

SaaS and other on-demand applications can be deployed faster, since there is no need for new hardware and virtually no installation requirement. Thus, on-demand applications largely eliminate the time and complexities associated with traditional software deployment. This allows servicers to more effectively respond to changing market conditions.

User-Group Integration

Because they can be accessed via the Internet, on-demand applications provide simplicity of access across inter–organizational and intra- organizational boundaries, facilitating efficient and effective collaborative environments. This allows the sharing of industry specific knowledge and expertise.

Providers of best-in-class cloud applications have proven adept at unlocking explosive growth in adoption of SaaS applications. According industry expert Siemer & Associates—an investment company that provides funding advice for IT companies—the SaaS market will continue its pattern of double digit annual growth, reaching $21.3 billion by 2015.

Choosing a Provider

Many users find it difficult or impossible to upgrade their software fast enough to keep pace with changing risk environments and regulatory requirements. Traditional “Shrink-Wrap” solutions, as well as more ambitious and lengthy on-premises delivery models, can be equally problematic.

In contrast, applications from experienced third-party service providers — whether utilizing cloud–based or traditional delivery models — can be a highly effective source of change-friendly technology solutions. This is especially true where the application is one aspect of a wider service offering, such as those of field service companies and other providers of outsourced business functions. The reason: Because these providers depend on ongoing business relationships rather than one-time up-front license fees, they have greater opportunity and incentive to maintain value and thus are far more likely to provide frequent upgrades to their applications.

Of course, many third-party service providers are neither interested in, nor capable of, developing the highly specialized software solutions needed to meet the test of accelerated change in today’s financial services market. They simply do not have the requisite resources, industry specific knowledge and expertise or internal technical staffing. However, those who do have these capabilities present servicers with a powerful resource and highly valuable technology partner.

Third-party business partners who posses keen industry experience enjoy another advantage: they are on the front lines of industry change. They gain understanding of new business realities and regulatory requirements, not just through organized and insightful intelligence gathering, but by experiencing them in the course of daily interactions with the industry. They are first-responders, if you will, providing the raw input needed to create and maintain responsive technology solutions for financial services clients.

The housing market is improving, with major implications for business mix, volume and profitability. At the same time, servicers face the most complex regulatory environment in history, making compliance a multi-level risk whose implications are yet to be fully understood and measured.

In these conditions, quick-response solutions are an important component of a sound business strategy. SaaS and similar cloud applications provide important advantages in terms of targeted response, lower cost, key industry insights and faster deployment. Highly skilled, industry specific third party service providers—who are stationed on front lines of the financial industry change—are in an especially strong position to help servicers unlock the potential of quick-response technology solutions.

About The Author


New Counselor Portal Emerges

The National Community Reinvestment Coalition Housing Counseling Network (NCRC HCN) is a national HUD approved housing counseling intermediary and a direct housing counseling service provider.  NCRC HCN has selected IndiSoft’s RxOffice Premium Counselor portal for case management options and a recently enhanced document management suite.

“NCRC HCN’s efficiency and productivity will improve with the use of our easy-to-manage workflow management system,” said Sanjeev Dahiwadkar, CEO and president of IndiSoft, a technology development firm that specializes in systems for the financial services industry. “To best meet the needs of homeowners, NCRC HCN needs technology that will allow their counselors to customize and increase workflow while being able to communicate with homeowners via email and other methods. The RxOffice platform is proven to provide the transparency, connectivity and reporting capability to agencies counseling homeowners.”

RxOffice Premium Counselor portal will facilitate the management of multiple services for NCRC HCN, including customizable automated workflow, which includes submitting cases to servicers and emailing auto-populated loan packages to homeowners. Additionally, a direct-to-consumer portal allows homeowners to create and submit applications to their counselors via an NCRC-branded consumer portal.

By using the RxOffice Preminum Couselor portal, NCRC HCN can better track the time each counselor spends on activities giving management a clearer perspective of the number of hours needed for counseling services. The portal’s reporting capabilities includes being able to generate various grant reports such as HUD9902, etc.

“We plan to use IndiSoft’s RxOffice Premium Counselor to enhance our efforts to provide consumers with the housing-related counseling they need, as well as HECM and homeowner education,” said David Berenbaum, NCRC’s chief program officer. “The portal is customized to our workflow and will automatically email auto-populated documents to homeowners. It also allows us track and serve military veterans more effectively.”

Let’s All Come Together

As you all know, I am a father of two. Everyday I learn new things from interacting with my two boys. They are truly amazing children. Sometimes I think the mortgage industry would benefit by interacting more with peers instead of believing that their way of doing things is the best way of doing things. Fortunately, opportunities for industry members to gather and brainstorm do exist.

For example, Hope LoanPort (HLP), the 501(C)(3) neutral, national, non-profit web technology provider hosted its Second Annual Partner Meeting at its Baltimore headquarters on November 5. Entitled Standardization in the New Culture of Compliance, the Meeting was attended by more than thirty mortgage servicing senior managers from their community development and/or default management departments with additional industry stakeholders from the regulatory, consumer advocacy and outreach, and investor communities.

As a national public utility HLP is uniquely positioned to bring together a diverse group of industry stakeholders in the interest of helping homeowners at-risk of foreclosure. This is achieved by advancing initiatives intended to promote efficiency, transparency, and consistency to the processing of foreclosure alternatives. Similar to the inaugural 2012 meeting when action items led to enhancements, the servicing industry’s concern with establishing processing standardization while maintaining regulatory compliance directly led to the following initiatives:

>> HLP has created a stakeholder subcommittee to identify the proper system enhancements to facilitate the post-modification counseling required through the Making Home Affordable Supplemental Directive 13-08: Borrower Post-Modification Counseling and Servicer Incentives. This HLP enhancement establishes the portal in a new part of the foreclosure alternative life cycle: for the first time, servicers will be able to directly open a new case in HLP and assign it to a registered non-profit counselor to initiate the required post-modification counseling

>> HLP will work with another sub-committee of residential mortgage servicers and various state and federal regulators to leverage and broaden its registration protocols for non-tax exempt entities that represent distressed homeowners pursuing a foreclosure alternative application. The goal is to establish a national registry or clearing house that the mortgage banking industry may leverage to help prevent mortgage modification scams

>> The Servicer Advisory Board will be instituted in 2014 for the purpose of bringing together HLP’s servicing partners on foreclosure processing initiatives

>> HLP will provide increased data points for counselors to generate required case documents with borrower and servicer information pre-populated, such as the servicer‘s address on the 4506-T Form

Said Camillo Melchiorre, HLP President and CEO, “We were happy to host our annual partner meeting and thank the attendees for their active engagement in discussing emerging challenges and opportunities. HLP is uniquely positioned to provide technology-based solutions that reflect changes to the mortgage servicing landscape driven in a large part by the impending CFPB servicing guidelines affecting the communication life-cycle of foreclosure alternative applications from homeowners and their advocates.

“I’m particularly pleased with the enthusiasm around our industry initiative to create the first national registry for non-tax-exempt entities that represent distressed homeowners seeking relief from foreclosure. It is a major step to establish a way to prevent mortgage modification scams in an era where financial predators are becoming more sophisticated and their schemes more difficult to detect until after the damage is done.”

HLP, powered by RxOffice, and a member of the HOPE NOW Alliance, is a web-based tool that streamlines foreclosure alternative applications on behalf of borrowers at-risk of foreclosure, allowing housing counselors to efficiently transmit completed applications to mortgage services. To date, Hope LoanPort has registered over 1,400 Counseling agencies, in 50 states, the District of Columbia and Puerto Rico. These counselors have access to servicers managing over 80% of the residential mortgages in the United States.

I’m thankful that forums like this exist but I’m most thankful for my two sons and the rest of my family. Enjoy your Thanksgiving my friend.

About The Author


MI Links Up With Servicing Platform

National MI, a private mortgage insurance (MI) company, has successfully completed a systems integration with LPS’ MSP servicing platform, a servicing technology for the mortgage industry. The integration is expected to save mortgage servicers time and money by allowing the servicer to report MI billing and disbursements, new loans, cancellations and delinquencies electronically to National MI.

LPS’ MSP servicing technology platform gives mortgage bankers the ability to automate all areas of loan servicing, including loan setup and maintenance, customer service, cashiering, escrow administration, investor accounting and default management for servicers throughout the country.

“We appreciate National MI’s trust in LPS’ best-in-class servicing technology to help optimize support for their customers’ MI servicing process,” said LPS Chief Information Officer Joe Nackashi.

Both Fannie Mae and Freddie Mac approved National MI as a qualified mortgage insurer in January 2013. National MI began writing mortgage insurance in April of this year. In late July, National MI agreed to insure an amount approximating $5 billion in residential mortgages in its first risk transfer transaction with Fannie Mae, with an effective date of September 1, 2013.

Founded in 2012, National Mortgage Insurance Corporation (National MI) is headquartered in Emeryville, California, in the San Francisco Bay Area. NMI Holdings, Inc., National MI’s parent company, raised over $500 million of capital in a private placement of its securities in April 2012. National MI has received approval from Fannie Mae and Freddie Mac as a qualified mortgage insurer, and has been approved to provide mortgage insurance in 48 states and the District of Columbia.

New Due Diligence Arm Forms

*New Due Diligence Arm Forms*
**By Tony Garritano**

TonyG***Wingspan Portfolio Advisors, a Dallas-based diversified mortgage services provider, has launched its due diligence, servicer surveillance and high-touch default advisory services arm from out of its new Denver, Colorado office. The new office and management team will significantly enhance Wingspan’s capabilities in these industry service sectors, which are becoming increasingly critical for lenders and servicers in the demanding regulatory environment.

****The Denver addition is the latest in a busy expansion year for Wingspan. In February, the company acquired the JPMorgan Chase servicing facility in Melbourne, Florida, and in May, it purchased San Diego and Dallas-based insurance claims management firm Dimont & Associates. Last month, Wingspan acquired a 400-person customer service facility from JPMorgan Chase in Monroe, Louisiana. Wingspan has grown to more than 2,000 employees in 2013 with these new additions and has substantially diversified its capabilities for the mortgage industry.

****The new Wingspan Denver offices will provide due diligence, forensic file review, valuation services, single-family rental oversight, as well as a full range of default and post-acquisition support services on a national basis. Ryan Lilly, one of the founders and former president of AMRE Solutions, will lead the expansion of this division and has been named senior vice president for Wingspan Portfolio Advisors.

****“With this addition, Wingspan now has offices in Texas, Florida, Louisiana, California and Colorado,” says Wingspan Portfolio Advisors CEO and President Steven Horne. “Our servicers and investors benefit from a full range of services for all their distressed loans and REO, along with complete loan fulfillment and other capabilities through Wingspan Lender Services. Wingspan clients now have all of the key resources they need for every aspect of their businesses and no longer have to worry about scaling up or down for volume fluctuations, with all of the attendant costs,” Horne notes. “We’ve got them covered.”

****“Wingspan is the perfect environment for our due diligence services,” says Lilly. “Our diligence platform was built to be the best at its business, whether in foreclosure management, rental oversight, due diligence, underwriting support and valuation, or in related technology. We are proud to now become an integral part of the industry’s best provider of diversified services for lenders, investors and mortgage servicers, bringing our special expertise to Wingspan’s impressive array of offerings.” Continues Lilly, “With continued delays in foreclosure timelines and an increase in secondary market activity, Wingspan is poised to offer traditional support along with innovative loss mitigation strategies. The Denver team looks forward to playing an essential role in Wingspan’s remarkable success story.”

Don’t Complain My Friends

*Don’t Complain My Friends*
**By Tony Garritano**

TonyG***I’ve heard many sob and sulk about the new CFPB initiatives. I humbly suggest another course of action. I say, instead of cowering, it’s time to act. How you might ask? The industry needs to prove to the CFPB, and quite frankly the whole world, that its practices are sound. And I have just the way to get started.

****Just yesterday I got an announcement that says that MISMO seeks interested parties to participate in a new Development Workgroup to identify data needed to demonstrate evidence of compliance with the CFPB National Servicing Rule. The CFPB National Servicing Rule is in final form and effective as of January 10, 2014. It is imperative that data points required to demonstrate evidence of compliance with the Rule be included in MISMO industry standards.

****Members of the MISMO Development Workgroup CFPB National Servicing Rule – Evidence of Compliance will conduct a detailed examination of the CFPB National Servicing Rule to identify and develop the necessary corresponding data structures needed to provide prima facie support for “Evidence of Compliance” with the rules. Necessary data structures and definitions identified that do not already exist within the MISMO Reference Model will be recommended for inclusion. In addition the team will develop an Implementation Guide to provide guidance as to how each data element corresponds to specific supporting statutory language. The final element of this project is to begin the development of the model of how MISMO will engage and work with regulatory entities, in a forward looking manner, so as to assist in the development of industry data standards necessary for consistent reporting and/or data interchange.

****The group will meet for approximately one year with four one-hour conference calls per month. If you would like to be a part of this effort, please sign up for “DWG-CFPB Servicing Rules Evidence of Compliance” through the website at the ListServ Sign Up or contact William Klumper, CIO First Mortgage Company, 431-4301 for more information.

****I urge you to get involved my friends. Be a part of the solution instead of sulking about the problem.

Mobile And Commercial Mortgages

*Mobile And Commercial Mortgages*
**By Tony Garritano**

TonyG***It has been a while since I last shared news about mobile technology penetrating the mortgage space. I recently learned of an interesting use of this technology in the commercial mortgage space. In this case, Real Integrated Technology, LLC has entered into a relationship and begun early adoption testing of its Commercial Site Inspector, (CSI), a mobile site inspection platform, with StanCorp Mortgage Investors, LLC (SMI). The ability to reduce the time it takes to perform a commercial property inspection, improve accuracy, and connect to its servicing system led the company to opt to proceed with additional field testing of CSI.

****SMI is a subsidiary of StanCorp Financial Group, Inc., a provider of financial products and services. SMI has a loan portfolio that includes approximately 6,500 loans, valued at $8.3 billion as of June 30, 2013. SMI currently sources and services the vast majority of their loans through an independent correspondent network.

****“We are very pleased that SMI has recognized the benefits of CSI and has decided to test the platform, evaluate its performance, and experience first hand the advantages it delivers to users,” said Mark Chrisman, CEO of Real Integrated Technology. “The result is that the firm will be able to quantify for itself the efficiency gains our inspection platform provides to the company and the industry.”

****“I am excited about the potential of the new technology which incorporates the efficiencies gained during the inspection by using the iPad, and the ability to directly and easily integrate the data into our servicing platform,” said Gregg Harrod, AVP, Operations at SMI.

****Consultants use CSI because it reduces the time that inspections require while improving their performance. “As an inspector, receiving and completing inspections on the iPad has greatly improved my efficiency by eliminating the need to return to my computer to capture my notes and pictures,” said Matthew Fisher, CEO and Chief Inspection Officer at California Property Inspection.

Someone Is Getting It Right

*Someone Is Getting It Right*
**By Tony Garritano**

TonyG***With several big acquisitions behind us geared at offering mortgage lenders an end-to-end system, and a lot of new regulations ahead of us, the loan origination space is very competitive. The Holy Grail in terms of being able to provide the best LOS on the market is about offering a fully integrated, data-driven system that is super nimble. We’ve been talking about the need for a system like this for years, but few if any have been able to deliver. Well, today I can safely report that someone in the LOS space is getting it right. Here’s what I mean:

****I recently had a demo of Fiserv’s Common Origination Platform, and it was very impressive. To be clear, I am not endorsing Fiserv’s offering. I haven’t seen every LOS on the market to be able to make an apples-to-apples comparison, but I have seen a few of them first hand and I can say that Fiserv gets what the mortgage industry needs and delivers.

****Why do I say this? The Common Origination Platform is just that, it enables lenders to originate all types of loans on a single/common platform. That’s important because it gives lenders an opportunity to cross-sell their credit card customers into a mortgage, or a boat loan, or another financing vehicle. By the same token, if the user is purely a mortgage lender, this technology allows them to easily expand into offering offer types of loans without having to use multiple systems.

****As I was taken through the screens, they literally looked and acted the same regardless of it we were in a mortgage loan or a commercial loan. Also, the end user saw data, not forms. The lending industry is becoming super regulated. So, lenders need to be agile. In the demo Fiserv touted, among other things, its integration with Compliance Systems (CSi). Mark Deese, Product Manager, Lending Solutions at Fiserv, literally told me that because of Fiserv’s relationship with CSi, lenders don’t need a traditional doc prep at all.

****The CSi technology manages data on a transactional level, eliminating the need to set up and maintain numerous templates and packages. How does this approach benefit the lender? As an example, a leading southeast bank realized some unexpected benefits after implementing CSi’s compliance solution. The solution, purchased to compliantly document financial transactions and mitigate risk, also reduced transaction processing time from 15 minutes to less than five minutes.

****In addition, bank employees spent less time inputting information and rendering documents as they would with a traditional doc prep, which allowed them more time with the customers generating interest in additional lending products. This improved customer interaction and resulted in a significant increase in sales at every branch. Generally speaking, it has been estimated that lenders can literally reduce the number of documents in their library by as much as 70% by using CSi’s data-driven technology.

****Beyond the benefits of fully integrating to a compliance vendor like CSi and offering a system that can originate any type of loan, the Fiserv offering is also fully integrated to LoanServ, Fiserv’s servicing system. The integration improves efficiency for all users by sharing data points and eliminating potential errors caused by manual data entry.

****With an increasing number of financial institutions supporting both production and servicing operations, the integration of the Fiserv solutions provides a consolidated view of each customer as well as a single view of risk for their loan portfolios. The integration eliminates duplication within processes and the business management of the systems.

****Regulatory requirements impact the need for greater standardization during the origination process and how data is presented to borrowers. On the servicing side, monthly statements also are becoming more standardized. The seamless integration of Common Origination Platform and LoanServ will eliminate duplication within processes and the business management of the systems, as well as reduce the number of touch points that may obscure an organization’s total relationship with its lending customers.

****The big picture that I got out of the demo was that Fiserv is now offering a system that is truly data driven from start to finish. Why is that important? When you’re operating in an intensely regulated environment you need a technology offering that can both comply and change on a dime, which is something you can only achieve when you have a fully integrated, data-driven solution.

****I asked Mark Deese during the demo what he thought the major industry advance/industry value proposition behind this new technology was and he put it this way:

****“If you’re originating a commercial loan, the screens look identical to when you’re originating a mortgage on the system. It looks and acts like the same system regardless of what lending vertical you’re working in. It’s one database so you only enter data once and you only have to do one update when there’s a regulatory or process change. Everyone is concerned about the regulatory changes coming in January 2014, but we at Fiserv have total control over the situation because we make literally one change and every lending vertical is compliant. It’s that easy for us and our lenders.”

Service? What Service?

*Service? What Service?*
**By Lew Sichelman**

LewS***And so, it seems, the lambs have been led to slaughter once again. How can this happen? According to the Special Inspector General for the Troubled Asset Relief Program, it’s because servicers of formerly distressed borrowers aren’t paying enough attention.

****Of course, a lot of this rests on the shoulders of borrowers themselves. But that perhaps one in every four borrowers who have received permanent modifications to their mortgages under the Home Affordable Modification Program found themselves in deep doo-doo all over again is just one more black mark against the entire industry.

****According to SIGTARP, the Treasury Department has lost $814 million in TARP funds paid as incentives for permanent HAMP modifications. That’s roughly 18 percent of the $4.4 billion distributed under the program.

****But another surprising revelation in the report is how much of that $4.4 billion went to servicers. The report says $2.2 billion went to investors – not shocking because they have to be placated if they were going to lose money – and $770 million was paid in home owner incentives. But the rest – $1.5 billion – went to servicers.

****That sounds eerily similar to the class action suits turned out by legal mills in which the plaintiffs receive pennies but the lawyers “earn” millions. I’ve always wondered why servicers had to be paid extra to do the job they are supposed to do in the first place. Yet, under HAMP, they received twice as much as the owners they were supposed to help.

****The report goes on to single out three companies – Ocwen Loan Servicing, J.P. Morgan Chase Bank and Bank of America – as the worst offenders. More than half the TARP funds spent on loans that re-defaulted were serviced by these three outfits. But 91 percent of the total was on loans serviced by just 10 companies, including Wells Fargo Bank, GMAC Mortgage and CitiMortgage.

****Why all this is allowed to occur isn’t totally clear, but it’s mainly because Treasury doesn’t require servicers to ask homeowners why they re-default. However, anecdotal evidence collected by SIGTARP is once again damning – poor service.

****According to borrowers, the very companies which are paid extra to help owners are guilty of miscalculating their payments, messing up the transfer of mortgage ownership, losing paperwork, failing to honor the modification agreement and allowing foreclosure proceedings to proceed even while the loan is in the process of being modified. That last one, by the way, is now prohibited under HAMP guidelines.

****SIGTARP has recommended that servicers be required to develop and implement an early warning system to identify and reach out to borrowers who may be at risk of re-defaulting. By flagging owners who miss one or two payments, the special IG says, servicers can recommend counseling, assistance or other steps to move borrowers back onto the straight and narrow.

****Hey, this isn’t rocket science, or even 11th grade astrology. As SIGTARP points out, borrowers most likely to fail a second time around receive the least possible reduction in their mortgage payments and overall debt, are still underwater on their loans and have subprime credit scores at the time of their loan modifications as well as high overall debt burdens.

****Duh! Servicers should be watching these borrowers extra closely as a matter of course. And they shouldn’t have to be paid extra to do so. Isn’t it a familiar mortgage industry mantra that lenders also are losers when borrowers lose their homes to foreclosure? It’s time for those companies which make millions administering mortgages on behalf of the loans’ owners to back up that claim with something representing the handle for which they are known – service.