Lenders Want Niche Additions to Core Servicing Platform

By Anthony Garritano

Glendale, CO -- While servicers are not likely to switch out old legacy/mainframe systems for a new core system given the current volume overload they're facing, specialty, niche systems that can be easily integrated within the core system will be in demand throughout 2009.

"Servicers will continue to be challenged with delinquencies," noted Rick Seehausen, president and CEO at business process outsourcing vendor LenderLive Network. "Another challenge will be customer retention. It's cheaper for servicers to keep a customer vs. on-boarding a new one. One of the reasons the Fed continues to lower the interest rate is to see if we can refi out of the problem vs. having to modify loans. I think we'll do both."

LenderLive Network Inc. is a business process outsourcing company focused on providing outsourcing services to the single-family residential mortgage industry. Lender clients can outsource all or any part of the mortgage process.

"Servicers will need CRM tools, analytics and eligibility tools," continued Mr. Seehausen. "They need to match borrowers with loan products. They'll also look to outsourcers to meet capacity needs. There won't be a massive turnover in servicing systems because a system conversion requires a lot of capital and time. Servicers today don't have either."

Flexibility will be a key attribute for servicing systems in 2009, which Bill Adamowski, president, knowledge process outsourcing at ISGN, believes will position the company's LSAMS system well. "LSAMS is not the market leader, but it's known for its flexibility. You can write your rules against it. It's not a big mainframe system. There's a renewed interest in servicing platforms. Prior to the meltdown there wasn't must interest. It's getting a lot of looks now."

LSAMS services both mortgage and consumer loans including FHA, VA, Fannie Mae, Freddie Mac and Ginnie Mae conforming products, HELOCS, revolving lines of credit, automobile loans, credit card loans and time-share servicing. The servicer has access to current customer data through a single servicing platform. LSAMS uses business logic to drive loan setup, billing, payment and delinquency management processes.

"We'll introduce new modules and rules around loss mitigation," noted Mr. Adamowski. "In loss mit you ask a question, get an answer and go down the decisioning tree to see what is the best resolution. As a result of market conditions you'll see better valuation models to determine the worth of the house in today's market. Also there's opportunity to introduce technology to help servicers handle covered bonds. There will also be an increase in communication and social media technology."

"You're surely going to see migration to specialized loss mitigation platforms that provide more robust decisioning support," added Steven Horne, the founder and president of specialty servicer Wingspan Portfolio Advisors. "Activity queuing and workflow solutions will be important as well. I think using e-signatures in loss mitigation is a fine idea that will help servicers close more workouts. We haven't adopted e-signatures yet, but it's something we will look at."

"In general I'd like to see GSEs rely more on specialized servicers that use this technology to help maximize the number of borrowers helped. We're having conversations with them about this now. There's a real role, particularly when working the more challenging loans, for companies like us to help."

"Even if servicers had the time, working these types of loans wouldn't be the best use of their time," continued Mr. Horne. "This is an area where we can complement them using our specialized personnel and technology." Among the technologies Wingspan utilizes DRI Management Systems. "Certainly, anything surrounding loss mitigation, specifically loan modification will be top of mind in 2009," said Duke Olrich, founder, president and CEO of DRI.