MortgageOrb.com this week caught up with Rich Rollins, founder and CEO of REO Sentinel and National Quick Sale, to get his thoughts on where this unpredictable business environment may be heading.
Q: As the servicing community continues to examine alternatives to foreclosure, do you believe certain options have been overlooked?
Rollins: To succeed with alternatives to foreclosure, the servicing community has to communicate better with borrowers, and it does not seem that has happened, as evidenced by continued borrower confusion over their options. One of the best options is the short sale, but they have been ineffective as a tool because they are so manual, labor-intensive and typically take weeks or months to get an answer from the banks.
Indiana is changing that, requiring an answer from the banks to a short sale offer in 30 days. Other states are looking at similar legislation, and that would be great news if the banks had a technology-based solution that allowed them to comply. A reengineered, technology-based process to handle this alternative is really necessary to meet the demand.
Q: What trends are you seeing on your end of the industry? How are loss mitigation departments ramping up their operations in response to the voluminous workloads?
Rollins: All available resources, already strained to capacity, are being moved to this effort to accommodate mass modifications. This shift comes with a cost, including lack of resources for a balanced loss mitigation strategy. Therefore, anything that slips through the "mod wall" will have few, if any, resources to work with before going to foreclosure and adding to an already large [real estate owned] inventory.
One of the tactics being used to address the volume is moving people from the origination side of the business to the servicing side, instead of laying them off and then going out to find qualified servicing people. This makes a lot of sense, since the origination people understand the business and are skilled at dealing with borrowers.
Some of the borrowers, of course, simply won't be able to stay in their homes, regardless of loan mods and payment plans. Short sales are perfect strategies here, but once again, they require time and effort that aren't available unless technology is utilized.
Q: How large of a role do you see technology playing as we delve deeper into fixing what appears to be a broken system?
Rollins: Technology is the key enabler. There is little hope of providing scalable solutions to meet the tsunami-sized flood of requests coming in now or in the future without technology assistance. All the critical steps benefit from technology-assisted workflow: collecting data and documents electronically, interfacing bi-directionally to servicing platforms; extracting required financial, credit and property valuations efficiently; and processing everything on a parallel -versus a serial – basis are examples.
New, up-to-date [net present value] models are required, along with intelligent analysis of portfolios and proactive, fulfillment-based solutions that will help determine who is successful and survives, and who doesn't.
Q: The year's coming to a close, a new administration's on the horizon and the mortgage crisis is as messy as ever. Any predictions on what 2009 will bring?
Rollins: More pain, more confusion and more foreclosures, unless scalable, technology-based solutions are included in the standard workflow and become part of the fabric of every workout process. Better borrower contact isn't optional; it is mandatory. Also, understandable plans must be clearly articulated to let borrowers know the parameters of what is being offered them, so they can move quickly to other alternatives if necessary, to avoid foreclosure.
Short sales, now that there is technology to help make them happen, will assist the industry in avoiding more foreclosures. With more than a million foreclosures looming, success with short sales could become the difference between life and death for lenders, investors and mortgage insurers alike.
