Technology Streamlines Default Management.

Mr. Kuegler is vice president of strategic sales at TransUnion Settlement Solutions.

New research by TransUnion indicates that mortgage delinquencies are expected to plateau after steadily increasing for the past five years. This has made the job of managing delinquent accounts as critical as ever for mortgage servicers. To address this need, new default management strategies have entered the marketplace that leverage technology and manage default pipelines based on the risk assigned to a given loan. The result is a significant reduction in later stage delinquencies and foreclosures.

This article will demonstrate how new technologies and strategies are helping servicers gain efficiencies and consistencies in their default management processes. It will explore how innovative solutions are incorporating custom models and workflow engines to automate the default management function for servicers.

A Loss Mitigation Opportunity

While most loan origination departments are already leveraging technology to improve their underwriting and origination processes, default management professionals continue to "work" their pipelines in very manual processes triggered by the aging of past due accounts. This typically requires the loss mitigation processor to make decisions based on embedded knowledge and personal experience, often leading to an inconsistent treatment of delinquent accounts.

While these default servicing practices are time-consuming and labor-intensive, most servicers are still able to achieve positive, consistent results due to the strong skill sets of their default management staff. However, could a significant productivity lift be realized by automating the process without compromising your employees' efforts? Is there a more efficient way to deploy the valuable analytic capabilities of employees to further reduce costs? These questions are being asked across the industry.

The default servicing professional's desire to improve the process, along with the need to apply greater consistency to the treatment of defaulted loans, has spawned a sophisticated crop of new technologies. These solutions incorporate lender-specific, risk-based underwriting rules into an automated decision engine. By integrating process-driven business rules, servicers can compress the loss mitigation process and increase productivity. The desired outcome is a standardized process that feeds objective data into the system and applies sophisticated decisioning to accelerate decision making. ...