Technology Does the Heavy Lifting for Lenders.(Managing REO)

Byline: Jennifer Harmon

New York-Mortgage loan default and foreclosure volumes are still on the rise, the pressure to get loans modified or refinanced is intense, and it's all happening while regulatory and investor changes are coming fast and furious. Technology is growing more impressive, especially in the current climate when lenders and servicers have to do more with less and within timeframes that can make the difference between keeping a loan on the books and losing it to foreclosure.

Foreclosure is, of course, a lose-lose scenario, says Duke Olrich, CEO of DRI Management Systems, Inc. in Newport Beach, Calif. "Lenders lose money and borrowers lose equity and, in most cases, borrowers lose in other ways, too. Anything that can be done to keep the loans out of foreclosure and performing, even at minimal levels, is good for everyone associated with the process, and technology is mission-critical in making that happen."

Mr. Olrich believes technology is good at making people more effective, especially when coupled with some good strategies. He says one strategy being employed with some lenders is the redeployment of human resources away from loan origination, which is slow right now, and toward loan servicing, which is not.

"Technology can come to the rescue if the right technology is employed. It makes sense, when you think about it, because loan origination people understand borrowers and they understand the business."

The technology piece that can help it work well is referred to as a "loss mitigation decisioning platform" and it is a rapidly evolving state of the art. The loss mitigation decisioning platform takes a lot of guess work out of the process by presenting the loan counselor with careful scripting and economic models for various alternatives that will be available to them.

"It is a far cry from having outbound phone operators with scratchpads and calculators, and the platforms enable a counselor to easily handle 50%-75% more loans than would otherwise be possible," says Mr. Olrich. "In addition to making a transition easier for someone from ...