S&P Sees Growing Demand For Special Servicing Firms.(Brief Article)

Standard & Poor's believes the future looks bright for servicers that specialize in managing seriously delinquent residential mortgage loans.

Citing "the volatile nature of the subprime mortgage market" and evidence of an economic downturn, S&P associate director Richard Koch said the need for special servicing may escalate.

He said special servicers continue to demonstrate their prowess at reducing portfolio delinquency levels by stemming losses through successful loan workouts and minimizing losses using efficient foreclosure timeline management and REO marketing. Special servicers generally take over management of loans that are at least 60 days delinquent.

And because of time constraints, they must be adept at quickly and accurately reviewing distressed assets, S&P said. Mr. Koch said special servicers must be able to determine the "net present value" of a troubled loan and use that information to make reasonable decisions about loss mitigation and foreclosure options.

In addition to MBS transactions, he said special servicers may see other business opportunities if the economy sputters and default rates rise. ...