BLOG VIEW: A Hypothetical View From The Mainstream

ing off this week's California Mortgage Bankers Association's[/b] Western States Loan Servicing Conference in Las Vegas, one takeaway is abundantly clear: Servicers are resilient. The show, now in its 14th year, did not attempt to mask or brush under the rug any of the servicing industry's well-documented and intensely scrutinized failures. All servicers in attendance, whether during panel sessions or informally in the exhibit hall, expressed some degree of disappointment with what's been accomplished since the foreclosure crisis began. The general reaction: "We've done a lot, but not nearly enough." But for an industry that has faced as much criticism as servicing has, the mood at the CMBA conference was surprisingly optimistic. Most attendees were probably very grateful for the absence of mainstream media at the conference, given all the negative attention created at other industry shows (e.g., a San Francisco protestor's attempt to citizens-arrest Karl Rove at last year's MBA Annual, the New York Times' coverage of REOMAC's spring conference). Nonetheless, I think it's somewhat unfortunate that the general public – which is more aware of the once-quiet back office's inner workings than ever before – doesn't get opportunities, such as those presented by the CMBA, to hear about the industry's success stories. Everyone knows that loan modifications lag foreclosures; few people realize what seismic changes have been made at the departments that have traditionally been considered banks' most change-resistant. Now, if a national news outlet had covered the CMBA show, one could make an educated guess as to how the write-up might appear in print: "Mortgage servicers, the companies that are currently slated to receive more than $20 billion in bailout funds but have so far helped only 9% of borrowers, convened in Sin City's luxurious Wynn Resort." (The report would likely neglect to mention the favorable rates that Vegas venues offer all conference organizers in August, as I learned from a person involved with the Women in Accounting conference that took place a couple doors over.) "Wells Fargo Home Mortgage's executive vice president, Mary Coffin, gave the conference's keynote speech, in which she noted that as many as five percent of homeowners who are more than 60 days behind on their mortgages have been denied loan modifications." (Coffin also pointed out that 10% of borrowers actively engage in loss mit but fall out, and 55% of borrowers do not engage at all. About 30% of borrowers are provided a workout, either through a HAMP mod or another option.) "Only six percent of Wells Fargo's borrowers have entered trial modifications so far, according to the Treasury." (Of course, the number of eligible 60+ days delinquent loans serviced by Wells tops 320,000, and the company has numerous modification campaigns for those borrowers who don't qualify for HAMP. Wells is also wrestling with the hefty volume of pay-option ARMs that accompanied its Wachovia acquisition.) "Later in the day, during a breakout panel session, a representative from Fannie Mae outlined his company's preferred loss mitigation strategies, such as short sales and deeds-in-lieu of foreclosure, which don't result in borrowers retaining their homes. Last week, the mortgage giant reported a second-quarter loss of $14.8 billion. Its conservator, the Federal Housing Finance Agency, subsequently requested $10.7 billion from the Treasury." (The Fannie Mae rep also stressed to servicers that they must move away from the "one and done' mentality regarding modifications, emphasizing the need to try other modification efforts in instances where HAMP doesn't work.) As the above hopefully implies, there was a lot of practical advice shelled out at the CMBA's annual servicing conference, and I hope you had an opportunity to hear some of it. But if not, don't fear: An upcoming issue of MortgageOrb's sister publication, [b][i]Servicing Management[/i][/b], will feature detailed coverage of some of the topics discussed. – John Clapp, editor, [b][i]Servicing Management[/i][/b] [i](Please address all comments regarding this opinion column to


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