PERSON OF THE WEEK: An intelligent use of data can prove to be the difference between an industry leader and an also-ran. To determine whether the mortgage banking industry is making the most of its available data, MortgageOrb spoke with Scott Goldstein, president and CEO of NDeX, a Farmington Hills, Mich.-based provider of technology and processing services.
Q: Do you believe that the mortgage banking industry is making the most of available housing-related data?
Goldstein: Data in our industry is tricky. Because it is constantly revised and frequently inaccurate, long-term planning based on data trends is a highly risky proposition.
Traditionally, forecasts based off of housing-related data have been wrong, which damages the credibility of both the data and industry forecasting as a whole. For example, RealtyTrac had to revise its forecasts for foreclosure filings upward in both 2008 and 2009, from initial projections of 1.9 million and 3 million, respectively. The final totals for those years were closer to 3.2 million filings in 2008 and 3.9 million filings in 2009.
Q: The misuse of robo-signing technology got the servicing industry into considerable trouble. Could this controversy have been avoided – and, if so, how?
Goldstein: The robo-signing controversy could have been avoided, but it did occur at a very tumultuous time when the industry faced unprecedented level of defaults. At that time, the servicing industry was focused on the big picture and the growing volume of delinquent files, and a few may have taken their attention away from the nuts and bolts of individual mortgage defaults.
Early in the situation, some servicers responded that every borrower that had been foreclosed upon was delinquent. While this is true, the issue never revolved around whether the foreclosures were warranted. While they were proper foreclosures, they weren't being executed properly.
Had the industry taken more care with the details of each individual file, this issue could likely have been avoided. In the end, however, the political will was determined to delay foreclosures at such high levels. Detail-oriented, thorough file execution is essentially what all of the new regulations should be about if the problem arose solely from documentation issues, but instead, the robo-signing scandal has broadened the scope of the solutions to include fixes to promote affordable housing.
Q: Today's servicers face an unprecedented workload volume. Is this something that can be solved strictly by technology, or is it a situation that requires more people on the job? Or, is the answer somewhere in between?
Goldstein: Today's workload volume necessitates both technology and people. And not just a little bit of technology and a few more folks on the job – it's a lot of both. With the new federal, state and local requirements in place – and all the penalties and headline risk that come along with them – individual file review is critical.
We've essentially reverted from a ‘wholesale’ business back to a ‘retail’ business. The pressure to fix the housing industry as the first step toward fixing the economy is a pretty tall order.
Q: Regulatory compliance requirements seem to be in a constant state of evolution. Are the mortgage technology vendors able to keep up with the latest federal and state regulatory changes?
Goldstein: The good mortgage technology vendors are able to keep up. As changes continue to come down the pipeline faster in a more widely dispersed nature, vendors need to be flexible and adaptable. When servicers audit their IT vendors, they should look at the software development process, change-management procedures, security policies and response time.
Q: In which areas of mortgage servicing do you believe that technology needs to be improved or upgraded?
Goldstein: If we've learned anything from robo-signing, it is that speed is not the critical need. While speed is important and technology can help with efficiency, data security has been and will continue to be the core focus.
In this industry, servicers, law firms and their vendors are always one headline on a wrongful eviction, one lost laptop containing personal information or one unencrypted data transfer away from another debacle. Data security presents the greatest risk. For that reason, security technology will always need to be upgraded and enhanced. There are no exceptions in the new regulations for weak information-security procedures.
