DRI Sees Technology Adding Scale to Default Management.(DRI Management Systems)(economic forecasting)

Newport Beach, CA -- While economists are generally optimistic about the pace of economic growth this year, some who follow the housing market still expect to see an increase in mortgage defaults.

Rising interest rates, the proliferation of new loan products, and the seasoning of loans originated in 2003 and 2004 all bode for an increase in defaults, they say. Plus, bankruptcy law reforms might push more troubled consumers over the edge by making it harder for them to shed unsecured debt.

While the jury is still out about where delinquency and default rates are headed, prudent lenders are making sure that their shops are ready to handle an increase in defaults if it should occur.

Duke Olrich, president of DRI Management Systems, says the rise of subprime credit quality mortgage loans has created a virtually constant need for default management services, regardless of the state of the overall economy.

Borrowers with adjustable-rate loans in particular could be vulnerable, he said. The origination of variable-rate products has increased over the past year and that has caught the attention of loan servicers.

"The variable loans, from a portfolio standpoint, could be a bigger problem because the rates are going up and marching past the ability of the borrower to pay them."

To be prepared, Mr. Olrich says lenders need to have a robust management system for handling defaulted loans. That's where companies such as DRI come into play.