No one can deny that the last few years have been good for companies that are in the mortgage servicing business. Asset managers, field service companies and property preservation contractors have all enjoyed what some have referred to as a target-rich environment.

Business was available for the taking and every firm that could do the work was getting the work. But those days are ending.

As the U.S. economy continues to recover and historic default and foreclosure rates normalize, some of the firms in this space are feeling the pressure to offer more in order to maintain their business levels.

Servicers are seeing fewer problem loans in this environment and they are now eager for some simplicity. Eventually, servicers will see their problem loans normalize and their outsourcing relationships will follow suit, leaving too many asset management firms and national preservation companies vying for far fewer work related contracts.

Servicers, like the borrowers they serve, want a single-point-of-contact to meet their asset management and home preservation needs. Asset management firms that can offer this in a manner that provides a complete end-to-end service and largely through their own crews are bound to be more attractive to servicers intent on cutting costs and streamlining their outsourcing operations.

While most of the larger players in the space have extended national networks to round out their offerings, firms that offer more of these services through in-house crews may have a tactical and competitive advantage. Asset management firms can still use a tactical mix of subcontractors and internal crews, but internal systems must be perfected such that the firm provides a simple interface with the servicer.

While this doesn’t suggest that an end-to-end provider can not succeed, it’s safe to say that companies that act like the old “one-trick pony” will no longer be viewed as a valid solution for servicers in today’s slower paced and steadily contracting REO environment.

To remain competitive, companies should strive to provide a cradle-to-grave offering. This should include preservation, rental programs, repair and 24-hour emergency services, short sale closing management, property inspections, asset management, administration services such as HOA, utility management, municipality and VPR services, for a start.

Aren’t firms in the space already offering these services now? The short answer is yes and no. The truth is that most asset management firms outsource these services and most preservation companies don’t even bother to offer them due to lack of knowledge or lack of funding.

National Property preservation firms that employ a “Boots on the Ground” philosophy have a distinct tactical advantage. Partnering and/or merging with such firms will create a unique equation unlike any this industry has to offer. Writing programs and implementing this type of program is what DAL specializes in deploying. It is the key to controlling your own destiny.

Pay attention to the writing on the wall. We have all been victims of the false stop and start of this industry. The truth is diversifying is taking control of tomorrow and, regardless of whether it means default or origination, merger or acquisition, or some other form of related business model, the time to react is right now. As the competition heats up between asset management firms ahead of what could be a shakeout, those firms that master the cradle-to-grave offering are the most likely winners.

The servicing community should be taking a look at their portfolios and projecting future asset allocation and area concentration.

These are the hot button mapping areas that can be matched up to the proper vendor that has resources within the actual footprint. Service levels should still remain the number one concern and this does not mean that the largest firm is always the best choice.

Integrating a service provider in the client servicing community can be somewhat difficult yet, once accomplished, can be long term, providing the scorecards are in the right direction.

Derrick A. Logan is the principal consultant with Distressed Asset Logistics, a firm that works with banks, credit unions, mortgage banks and asset management firms. The opinions above are his alone.