DURING THE PAST 15 YEARS, LIKE SO MANY OTHER VETERAN DEFAULT INDUSTRY professionals, we have witnessed countless changes within our dynamic industry. These changes have included growing consolidation of lending and servicing institutions, proliferation of third-party outsource vendors, myriad procedural and investor guideline changes, and shifts in local and federal laws governing the industry. As a result, most within the mortgage servicing arena would agree with this assessment: The only constant has been change itself. [??] A great many of these changes have to do with an increasingly global view of the industry. Another trend reshaping our industry has been the move to centralize more processes within national servicing operations and their service providers. This has given rise to a growing interrelation between different sectors and interests within mortgage servicing. [??] One important change we see beginning to materialize has to do with the relationship between the foreclosure process and real estate-owned (REO) disposition. Today we are observing top-level servicing managers throughout the industry addressing the reality that final disposition of nonperforming real estate assets begins with the first delinquency. [??] These executives are recognizing that the entire default process should be a continuous flow of intertwining and efficient business processes. This approach makes the most of continuous inventory tracking capabilities that are designed to manage and streamline the entire process. [??] With the remarkable technological advances of the past several years, REO managers, their staffs and upper management can find out much more than ever before about the history of an REO property prior to a foreclosure sale. In addition, with vastly expanded contractor networks, national field service providers, with their specialized property preservation (P & P) personnel, have dramatically increased their ability to complete REO services in a timely and consistent manner. This is something that is critical to all REO managers.
These expanded networks enable national property preservation service providers to successfully service the servicers' and investors' properties, whether they be in urban inner cities or ultra-rural localities, and everywhere in between.
This nationwide service capability is further enhanced by the improved quality control and reporting technologies that many national companies have developed over the years. Many tasks, including providing repair and maintenance estimates to filing insurance claims (on damaged properties), are streamlined in the process.
Couple these factors with a few others and one can grasp the appeal of this "cradle-to-grave" approach. Some other benefits include standardized flat-fee pricing structures, greatly simplified bulk-billing capabilities and, most important, the inherent, magnified accountability that a national service provider must have.
For years within many loan-servicing organizations, it was often said that a virtual--and sometimes actual--barrier existed between the foreclosure and REO departments. This seemed to be the case especially in larger servicing shops. This barrier not only impeded cooperation between the foreclosure and REO departments, it also wasted valuable time and contributed to higher losses for the servicer.
Foreclosure specialists work closely with their P & P vendors to ensure that their institution's nonperforming real estate assets are being maintained and protected against deferred maintenance, vandalism, adverse weather conditions and the like. When these properties become vacant and/or abandoned, the vendors are also responsible for securing them. Because the P & P...