A press announcement today by First American's default outsourcing business is worth some attention, both because of what it suggests and because it underscores how alot of business gets done in this side of mortgage industry. It's also interesting because default management has never really been the sort of thing that corporate PR teams felt warranted press releases on a major national wire -- until now, apparently. From the press statement:
First American First Lien Outsourcing, a member of The First American Corporation family of companies, announced today that it has partnered with National Bankruptcy Services (NBS), the nation's premier provider of bankruptcy administration and vendor management services, to jointly provide default management and administrative outsourcing services to mortgage lenders and servicers ... "First American's VendorScape technology complements NBS' existing proprietary bankruptcy tracking software and provides clients with additional transparency at the loan and portfolio levels," said Larry Buckley, executive vice president of NBS.
Here's what the press release doesn't say -- NBS is essentially an outsourcing business for creditor processing of legal work associated with borrower bankruptcies, and is the national referral practice tied to Dallas-based law firm Brice, Vander Linden and Wernick, PC. This law firm has been at this sort of work for a very long time, is very good at what they do, and has managed to get a good book of business from lenders as a result. Lenders will often dictate to a company like First American's default services division that any borrower bankruptcies must be managed using someone like NBS -- meaning that First American is forced to pay fees to NBS, rather than managing the attorney referral and tracking process itself. In some ways, then, that would seem to make NBS a competitor for at least one chunk of the "default management" business -- which is partly what makes today's announcement interesting, beyond the fact that First American can now offer lenders a default management solution that includes full-featured and attorney-led support for borrower bankruptcies. The solution here isn't really the "end-to-end" variety for default management that it's being touted as by First Am, IMHO, but it's certainly a positive step forward in terms of better managing the various legal processes tied to borrower defaults. There are other areas of default management that require legal expertise to manage and aren't covered by today's announcement -- but that's a story for another day. BTW, also interesting here is the man behind the deal, although he's not mentioned as such in the press release. Every deal needs a grease man; that guy in this case is clearly the above-quoted Larry Buckley, who (surprise!) was the president of First American's default outsourcing business prior to joining NBS.