Comments on: Live from InterACT - The Mortgage Crisis http://smartenoughsystems.com/wp/2008/04/29/live-from-interact-the-mortgage-crisis/ Delivering competitive advantage with smarter systems through automating decisions Fri, 04 Jul 2008 17:44:20 +0000 http://wordpress.org/?v=2.5.1 By: jtaylor http://smartenoughsystems.com/wp/2008/04/29/live-from-interact-the-mortgage-crisis/#comment-9763 jtaylor Thu, 01 May 2008 17:22:08 +0000 http://smartenoughsystems.com/wp/?p=387#comment-9763 Chuck Thanks for the comments. The whole tangled web of servicers and sold-on loans is certainly making it harder as is a lack of analytics in determining who could and will use a work out program. JT Chuck
Thanks for the comments. The whole tangled web of servicers and sold-on loans is certainly making it harder as is a lack of analytics in determining who could and will use a work out program.
JT

]]> By: Chuck Elgin http://smartenoughsystems.com/wp/2008/04/29/live-from-interact-the-mortgage-crisis/#comment-9762 Chuck Elgin Thu, 01 May 2008 17:09:54 +0000 http://smartenoughsystems.com/wp/?p=387#comment-9762 Another aspect to the <a href="http://www.podtech.net/home/4931/credit-crisis-winning-in-the-back-office" rel="nofollow">Credit Crisis</a> is the ability of the Mortgage Servicing industry to handle the significant increase in customers who cannot make their normal mortgage payments. Trillions of dollars in mortgage loans are outstanding in the U.S. An unprecedented level of defaults is sweeping the nation, creating staggering losses for mortgage note holders, credit underwriters, and other investors in Mortgage Backed Securities. In 2007, of all the foreclosures completed on behalf of the Government Sponsored Enterprises (Federal National Mortgage Association and Federal Home Loan Mortgage Corporation) by Mortgage Servicers, over 50% had absolutely no borrower contact prior to the foreclosure action being completed. Investors receive foreclosed properties back from Mortgage Servicers and must refurbish and re-sell these homes. The expense for investors and underwriters of Mortgage Backed Securities is soaring into the billions of dollars annually. As a result: Homeowners are not given a fair chance to stay in their homes. Work-out options to avoid foreclosure are not explored, let alone exhausted. Mortgage Servicers are not incented to work loans out, but rather to liquidate them as quickly as possible. BearingPoint and our partners have worked on a number of projects for Mortgage Servicers both large and small. Our work confirms that servicers need assistance with: Deployment of advanced analytics that provide detail on performing loans likely to transition to a different state and recommended resolutions thereof Assistance with process improvements, restructuring and toolsets to back the outcome of the analysis with high performance operations Institution of performance measurement and predictive models to enable continuous, proactive loss mitigation efforts We believe that by applying advanced loss mitigation techniques, the great majority of customers will be able to work effectively with their Mortgage Servicer to resolve their delinquency and become current with their mortgage. It is time to rethink and reengineer how Mortgage Servicers deal with customers in default in order to deal with the credit crisis. Another aspect to the Credit Crisis is the ability of the Mortgage Servicing industry to handle the significant increase in customers who cannot make their normal mortgage payments. Trillions of dollars in mortgage loans are outstanding in the U.S. An unprecedented level of defaults is sweeping the nation, creating staggering losses for mortgage note holders, credit underwriters, and other investors in Mortgage Backed Securities.

In 2007, of all the foreclosures completed on behalf of the Government Sponsored Enterprises (Federal National Mortgage Association and Federal Home Loan Mortgage Corporation) by Mortgage Servicers, over 50% had absolutely no borrower contact prior to the foreclosure action being completed. Investors receive foreclosed properties back from Mortgage Servicers and must refurbish and re-sell these homes. The expense for investors and underwriters of Mortgage Backed Securities is soaring into the billions of dollars annually. As a result:
Homeowners are not given a fair chance to stay in their homes.
Work-out options to avoid foreclosure are not explored, let alone exhausted.
Mortgage Servicers are not incented to work loans out, but rather to liquidate them as quickly as possible.

BearingPoint and our partners have worked on a number of projects for Mortgage Servicers both large and small. Our work confirms that servicers need assistance with:
Deployment of advanced analytics that provide detail on performing loans likely to transition to a different state and recommended resolutions thereof
Assistance with process improvements, restructuring and toolsets to back the outcome of the analysis with high performance operations
Institution of performance measurement and predictive models to enable continuous, proactive loss mitigation efforts

We believe that by applying advanced loss mitigation techniques, the great majority of customers will be able to work effectively with their Mortgage Servicer to resolve their delinquency and become current with their mortgage. It is time to rethink and reengineer how Mortgage Servicers deal with customers in default in order to deal with the credit crisis.

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