This week, Mortgage Orb presented a few questions to Ty Miller, chief operating officer of First American First Lien Outsourcing. Miller, who spent years in servicing operations management before joining First American, says his group works with servicing portfolios all along the spectrum: from prime and Alt-A paper to subprime and scratch-and-dent portfolios.
Q: What services does your organization offer to the servicing community?
Miller: We're doing everything from loss mitigation through REO, and we have some clients that pick and choose from the menu [foreclosure and bankruptcy processing, use of First American's technology platform, etc.].
But loss mitigation is the huge play. It's become the hot button. We're seeing people across the industry having capacity issues, and servicers want to be sure they're giving borrowers every opportunity to keep their houses.
Q: How early in default cycle are you stepping in?
Miller: It's really all over the board. With a couple clients, we jump in at day 32. But more often than not, [we get involved] around the 60th day of delinquency.
Q: Once you've made the splash on behalf of a client, what kind of work are you doing?
Miller: Things have evolved quite a bit. For instance, servicers traditionally protected themselves with their equity positions. But today, most [borrowers] are upside down. And with a lot of them – especially in your high-volume states like Florida, California, Ohio, Michigan and Arizona – you're seeing piggybacks. The piggybacks, for all intents and purposes, were down payments on these loans – and they're gone.
On the first-lien side of the house, we're spending a lot of time with the Fannie Mae HomeSaver Advance program, which has been highly successful. We haven't seen many of the subprime and scratch-and-dent players taking that kind of approach: taking back an unsecured second lien, if you will.
But we're doing a lot of different things – sending FedEx packages to borrowers and trying to get them on the phone, or having our field service personnel sit on a house and try to make contact with a borrower. [Miller notes that this strategy has yet to be fully developed and deployed.] We also have a Web portal that we use that allows a borrower to go in and input financial information without actually talking to someone – this takes away some of the stigma that borrowers are facing today. Additionally, we're being more aggressive on the short-sale side.
Q: What are you seeing in terms of strategies for reinstating loans, as opposed to liquidation options?
Miller: We're doing more of what I would characterize as ‘true’ forbearance plans, where you're allowing borrowers to sit idle for a period of time. This is a more utilized strategy than it ever has been before.