Changing the Playing Field for Loan Servicing, Loss Mitigation and Default Administration
by: Geoffrey A Oliver, CPA, CMB
The loan servicing business is undergoing major scrutiny with operating, profitability including a “run-away” cost to service and regulatory compliance pressures. With the Dodd Frank legislation, the recent uncovering of foreclosure documentation problems, a period of time where the most loans ever in default has occurred and where the overall loss mitigation process is ill equipped to deal with all of this, its time to change the playing field, possibly forever.
Unfortunately the “silo” structures and processes that many servicers have, contribute to many of the issues being faced today. Poor communications across servicing teams, data accuracy issues, aging loan servicing systems and loss mitigation processes that require heavy staffing with no economies of scale are all issues contributing to the “run away” costs. Meanwhile, the effectiveness of loss mitigation efforts is proving to be less than acceptable.
A fundamental concept embedded in this “change the playing field” effort is that a “box car” approach, where all loans are treated the same, especially during delinquency, has never really worked and definitely does not work in the current credit downturn.
Read the entire article. Changing the Servicing Platform Article 4-4-11
