(Update 1: corrects number of employees at the firm) Perhaps the most enduring aspect of the nation’s mortgage crisis thus far is this: it is bringing together two usually separate sides of the mortgage banking industry, in originations and default management. Long separated by both process and staffing, we’re seeing many origination specialists — whether technology, process, consulting, document management, or otherwise — make the move into the default space as the drumbeat of loan modifications continues to grow ever-louder. The latest firm to make the move is business process outsourcing (BPO) vendor Genpact, which said Wednesday that it had rolled out a new line of services designed to target growing demand for loan modifications. “Right now, 1 out of every 150 U.S. home loans are in foreclosure, 20 million American homeowners have mortgages that exceed the value of their homes and more than 10 million homeowners are seeking refinancing in this low interest rate environment,” says Bob Pryor, who runs sales and marketing at the 35,500-employee firm. “This increase in mortgage activity has placed tremendous additional pressure on the mortgage industry’s already-limited resources. We believe that based on our expertise in streamlining processes, and our record of successful service to the industry, we are uniquely positioned to assist lenders manage this increase in activity.” A unique position is one thing, and Genpact is very well known as a BPO vendor in the origination space; the firm has worked with such clients as Wachovia Bank, and has deep experience in loan processing, underwriting, closing, and even post-closing processes. But the firm is hardly alone in pitching a new suite of services designed to manage some or all aspects of the loan modification process. The mortgage market has been flooded in the past 12 months with firms expanding their product and service offerings into the loss mitigation space, with a particular focus on loan modifications. The reason? Loan modifications are seen by most as, essentially, a “re-underwriting” of an existing origination. The list of firms offering loan modification solutions is a long one, and includes the traditional title-related outsourcing giants, such as The First American Corp. (FAF), which in August of last year rolled out a what it called a “single, complete loan modification cycle solution” for servicers. The company’s solution includes credit scoring, valuation services, risk modeling, scoring, document preparation and document recording to identify borrowers who are most at-risk of foreclosure. Using this information, the FAF solution presents customized refinance and workout options. In Nov. of last year, Lender Processing Services, Inc. (LPS) said it had rolled out its own loss mitigation outsourcing platform, called RediMod. LPS’ platform focuses on enabling mass loan modifications by automating loan eligibility and best-fit determinations for modification programs, and then combining loan-level and portfolio analytics with customizable customer contact strategies tailored to meet a servicer’s specific requirements, according to the firm’s website. Houston-based Integrated Mortgage Solutions, a long-time default services outsourcer, launched its Asset Disposition and Management Services division, or ADAM, late last year. The firm’s ADAM platform incorporates IMS’ existing loss mitigation services — skip tracing, door-knocking, inspections and preservation — with a borrower outreach call center and short sale service. In contrast, Genpact’s approach looks to simplify interactions between borrowers and lenders using a set of web-based modules that can be rapidly deployed to process consumer-facing modification requests with minimal lead time, the firm said in a press statement. The firm then uses back-end analytics to develop modification plans pursuant to a servicer’s internal process, and will provide the tools needed to execute a modification, as well as track the short and long-term performance of a modified mortgage. “Our approach to loan modifications cuts red tape for the consumer and provides a clear, easy to understand roadmap throughout the modification process,” says Genpact’s Pryor. But with redefault rates among modified mortgages already running at 50 to 70 percent — or more — within just six months of modification, it’s clear that the challenge here isn’t just managing through the red tape often associated with the modification process. It’s in correctly identifying those borrowers most likely to reperform and stay reperforming, while expeditiously managing through a growing volume of borrowers for whom a modification may not be the best available option. Paul Jackson is the editor-in-chief of HousingWire.com and HousingWire Magazine.
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