Gehlke: REO Industry Needs To Adapt to Changing Times.

One thing the mortgage servicing industry learned in the wake of the Y2K computing conversion crisis is that it is possible to overhaul systems.

And as a result, servicers are engaged in more benchmarking of the vendors with whom they do business, according to C.J. Gehlke, CEO of REO Nationwide.

Being among the most seasoned REO valuation and disposition experts in the country means that the REO Nationwide leader has a unique view of how the current economic environment and other factors may change the way business is done. The firm was founded in 1982 and adopted its present name in 1986.

Ms. Gehlke, for one, thinks the industry needs to be ready for change.

Even with economic growth starting to take hold, many lenders anticipate a rise in defaults.

"It is interesting to note that the country has never been in debt to the extent that it is now," she said, noting that credit card, auto lending and cash-out refinancing have added to the burden.

When interest rates eventually rise, that may affect loan defaults and REO management, she points out. Already, Ms. Gehlke said she is seeing an increase in inquiries from companies that are considering starting to outsource REO management. Some lenders are eager to figure out how they can manage a potential increase in workload before they find themselves in the heat of the fire, she said.