Paul Sveen became the chief executive officer of Integrated Asset Services in May. After spending 25 years in the industry, Sveen will lead IAS through a tumultuous market. IAS provides default services to financial institutions, and it specializes as a technology provider as well. Sveen said savvy businesses can still find opportunities amidst consent orders, robo-signers and a shadow inventory of millions of distressed properties. HW: Since the robo-signing scandal surfaced late last year, the default and REO space screeched to a halt as servicers had to correct documentation. When will the REO machine be up and running at the previous pace again? Sveen: I think the REO machine, such as it is, is already up and running. It’s just a different beast than it was before. Why wouldn’t it be? It’s a very different market environment. Banks today are looking at a range of alternatives to get distressed product off their books, including short sales and loan modifications. They’re also looking at de-constructing the REO process to get best-in-class performance across the various REO functions. They have to be smart. There already exists this tremendous supply/demand pressure on the market and banks don’t want to drive it down any further. Consequently, we don’t look at this in the sense of whether REO is or isn’t going to come back, we’re looking at it from the perspective of what are the most cost-efficient, socially acceptable ways for institutions to remedy their issues. That’s why we have a full suite of solutions beyond REO management, including programs built around a range of pre-foreclosure loss mitigation processes such as short sales and loan modifications. HW: And then the pipeline of new foreclosures coming onto the market. How long in your estimation could it take the market to work through the shadow inventory of several million foreclosed  distressed properties? Sveen: I think we’re in year four of a 10-year cycle, so I’d say we’re looking at another four to five years at least. Look at the numbers. Best estimate is there are around 6.5 million mortgage default units on the books right now, and using all means available, including REO, short sale, and modifications, we can realistically move a million to a million and a half units a year. That’s going to take at least four years without additional inventory. HW: Short sales have picked up in recent years, almost tripling in some reports. But some said 2010 would the year of the short sale, and when that didn't happen they said 2011 would be. But recent figures still show foreclosures and modifications outnumber these transactions. What's the hold up on the short sale movement that promised so much? Sveen: First off, I believe calling any year the ‘year of the short sale’ is problematic since banks are using multiple avenues to deal with their distressed residential portfolios. More than that, short sales are complex and often onerous transactions. The process involves a lot of uncertainty regarding the market value of the property and multiple separate negotiations, and once the bank is convinced it has all of the facts, it has to decide if it’s willing to take a loss at that time—all of which means there are more questions than answers when you start the process. All in all, I’d have to think short sales have been utilized far less than originally expected. That being said, there are programs that attempt to be proactive before going to market. My company launched its pilot program in the 4th quarter of 2010. Our experience so far has proven that we can move from offer to close in less than 40 day on average, a process that’s normally been taking the industry somewhere around 115 days. We try to get all the approvals done up front, all the negotiations completed, and all the decisions around the borrower and pricing in place before the property goes to market. This, without argument, is where the market needs to trend globally, to get more of the administration work done early, improving both the buyer and seller experience. Clearing many of the administrative hurdles before beginning the sale process allows distressed properties to sell, execute, and transact more like normal properties. HW: The data analytics segment of the industry has seen a lot of movement in recent years. Spinoffs, mergers, acquisitions. Why all the activity? Is it a sign of how valuable data has become since the crisis? Sveen: It’s a sign of how valuable the data has become, period. Ten years ago, mortgage data was barely a multi-million dollar industry. Today, it’s a multi-billion industry. And it’s only going to get larger and more significant as the need for intelligence increases over time. Look at what’s going on in the market right now—the ongoing issue of prolonged default cycles, loans sitting in servicing shops for longer durations, the emergence of more systemic oversight and regulation—all of this means banks need to know more about what they have and know more about what they don’t know. And they’re looking to data to provide that kind of informed insight. So, the need for meaningful data has increased and the need for useful analytics on the data has increased along with it. Collectively, this has created a bit of fervor in the industry. Everyone’s looking for some kind of an advantage, something distinctive to add to their core competency. It’s not at all surprising to see so much M&A activity around data companies. HW: What changes could be ahead for IAS? New expansions? New products in the works? Sveen: We’re looking squarely at changes in the regulatory environment to be the driving force in our space for a while. The consent orders issued by the government earlier this spring are clearly the hot topic of the day, and they’re consuming the industry’s focus. I think the agreements represent an unprecedented change in philosophy around the mortgage space in general and servicing specifically.  The plans overlay requirements and regulations that will require new services and products to facilitate compliance with the orders. This is all very new, of course. The consent orders were only signed off toward the end of April, and the firms, each of which was given a unique order, have 45 days to develop a plan and another 15 days to deliver, so June 15 is really first deadline. The companies, there are 14 of them, then have 60 days to implement their plans. Write to Jon Prior. Follow him on Twitter @JonAPrior.