Servicers are facing difficult decisions in 2009 concerning a combination of regulatory strangleholds and an ever-struggling borrower base. But, panelists at the Texas Mortgage Bankers Association’s 5th annual Loan Servicing Conference say foreclosure should remain the last option. “Four or five years ago, most servicers didn’t know Fannie Mae and Freddie Mac from Farmer Brown,” remarks one speaker to HousingWire, asking to remain anonymous. “Give me curtailence, give me forbearance, but never use the F-word (foreclosure). Keep people in homes, and soft sell the refinancing.” Indeed, advice is flowing in the halls of the Frisco Embassy Suites, and the buzz of optimism is filling any empty space as servicers proffer a collective consciousness that their businesses may finally be moving out of purgatory and into something resembling progress. A swath of initiatives to freeze foreclosures ended recently, and servicers recently implemented a series of new guidelines from the Obama administration to modify and/or refinance mortgages for certain borrowers. While no participant will speak publically (the event is officially closed to the press), the need to share information and increase transparency is taking priority here. One afternoon panel focused on maximizing insurance recovery when damage is inflicted upon bank-owned properties. Another focused on advice regarding how to best manage the process of loss mitigation by including refi fees into loan modification documents, so that borrowers can repay any fees over the life of the loan, instead of in a shorter timeframe. One servicer used the Q&A portion of a panel to brag that her company, which manages around 3,500 mortgages, had developed its own strategy – a hybrid of government aid and grass-roots customer service – to keep defaults below 3%. “Below 3%?” the speaker asked in response. “I want to work for you.” Another panelist stressed the importance of creating a timeline of events on every property: take photographs and log the condition of the house, send contractors regularly to “eye-ball” any damage done to the home. “After all, properly insuring properties helps lower servicer risk,” said a panelist, to which audience members nodded with appreciation. The TMBA conference concludes today. Write to Jacob Gaffney at