Evolution of Computer Power Allows 'New Paradigm' for Servicing Systems.(mortgage loan servicing systems)(Brief Article)(Statistical Data Included)

The most widely used systems for automating loan administration are out of date, according to one mortgage industry executive who spoke at the MBA National Mortgage Servicing Conference here.

"Most servicing systems on the market today are 20 to 30 years old and do not address the needs of today's servicers," said William Erbey, chairman and CEO of Ocwen Financial Corporation, West Palm Beach, Fla.

Those systems are built using computer architecture that reflected the cost of data storage in the 1960s and '70s, he said. But "tremendous advances in the cost of data storage over the years" have made that core architecture obsolete, he believes.

As a result, it now makes sense to use systems that manage the entire life cycle of the loan, including default management, in a Windows-based operating environment, he said.

Ocwen, a specialist in managing troubled and "hi-touch" loans, built its own servicing system because it found existing systems lacked the functionality required for its business. At the beginning of this year, Ocwen serviced $16.3 billion of loans for others.

Originally, Ocwen bought an off-the-shelf servicing system and surrounded it with default modules that the company built in-house. But this required many interfaces that were expensive to maintain and created data ...