Tech Solutions For Distressed Mortgages.(Managing REO)

Byline: Jennifer Harmon

Bethesda, Md.-Many lenders who funded payment-option ARMs and interest-only ARMs are very focused now on what is going to happen with the next wave of ARM adjustments.

Linda Simmons, senior vice president of business at Overture Technologies says using the company's new re-decisioning process six to 12 months in advance of any ARM adjustment can assist lenders with gathering additional borrower credit information and asset valuation, which actually helps the borrower out before the adjustment occurs.

Overture, a provider of decisioning software for the mortgage industry, has adapted its solutions to deal with distressed mortgages. She says the major impetus that drove Overture to create the re-decisioning process is that the industry got very comfortable using automated decisioning, specifically at Fannie Mae and Freddie Mac, to do underwriting but never truly pushed the automated decisioning any further down the mortgage value chain.

For the past year, the company has been closely looking at other places where decisions get made in the mortgage process, either by people or by Excel spreadsheet, in the absence of automated decisioning. They looked closely at what loss mitigation efforts looked like through product pricing, eligibility and automated decisioning.

"Loan servicing is a great opportunity. There are lots and lots of decisions that get made," she said. "Is this the right product for the borrower? Is it the right rate for them? Are they really eligible for this product? It seemed to fit very nicely, using our existing automated decisioning capabilities in a different spot in the whole mortgage process. The components already existed. It seemed intuitive for us to take this approach. Since then, we have developed and delivered a proof of concept that takes data from the servicing system and enriches it in a variety of ways."

Through Overture's re-decisioning, there is much more credit information, better asset information and better understanding about whether the borrower is employed or not, Ms. Simmons adds.