Housing Slowdown Augurs Need for More Default Technology.

SAN MATEO, CA -- Lenders and servicers are currently concerned about the effect of falling housing prices and resets on adjustable-rate mortgage loans that might drive up defaults. Some say rising rates could push up ARM reset payment levels along with a housing market collapse that creates a huge amount of defaults.

Other factors that are impacting defaults are the large number of investors that have driven up housing prices above sustainable levels in many markets, the large amount of fraud in certain markets, and the potential rise in interest rates, along with a potential economic downturn that could increase unemployment, according to Ture Anderson, director of product management at Remend.

"There are a number of perfect-storm predictions for the mortgage industry that everyone is concerned about. At this point, everyone is watching and waiting to see which way things will go," said Mr. Anderson.

He described three main areas where servicers are looking at adding new technology in the default management area. Servicers are interested in improving their ability to report and forecast what is going on in their operations. "Remend has just introduced a new product called Remend Analytics that allows servicers to track and measure vendor performance from multiple data sources and provides them with a dashboard along with vendor and service level agreement reporting."

Mr. Anderson said his clients want to improve their loss mitigation operations, because servicers want the ability to configure workflow for each type of loan, including prime and subprime. "This will help them to have a best execution in terms of decreasing defaults and reducing loss severity on the loans."

Servicers are also working to increase accuracy of valuations. They want to be able to pull in multiple data sources to compare with the valuations that they are getting. "There is worry about the valuation risk associated with properties. Servicers want to be able to efficiently manage their valuation operations to track vendor performance and to have a fast turnaround time on valuation orders."

Remend Analytics, which was formerly called Remend Information Hub, provides the means to consolidate vendor information from multiple sources. The solution provides servicers with comprehensive analysis and reporting that enables management and operating teams with timely operational and performance reporting on individual vendor activity. The direct benefits to mortgage servicers include allowing servicers to proactively monitor events and completion of tasks. Critical items, such as claim reimbursement or foreclosure filings, can be completed in a timely manner, preventing penalties from investor groups and improving rating agency reports.