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» Guard and overlays being pretty tight, we should expect to see more training geared at helping originators source the right type of loans and borrowers. Due diligence on the front end is the catalyst to decreasing things like repurchases, defaults, and slow pays. The common theme with trends in origination for 2013 is a critical- and forward-thinking discipline. The more focus originators give to a business plan that includes a balanced make-up of production combined with an emphasis on training and development, the more likely they will recognize success in 2013. Ron Lopez has more than 28 years' experience in mortgage banking and manages the consumer direct division at Gateway Mortgage. He is a University of North Texas graduate with a bachelor's degree in business finance. C O M M U N I T Y R E V I TA L I Z AT I O N CHAD MOSLEY SVP, BUSINESS DEVELOPMENT Mortgage Contracting Services LLC As an industry, we have seen the REO market reach never-before-seen peaks over the last five years and, though now trending downward, remain higher than the historical average. With this trend, the strategic application of REO repair and rehabilitation work has greatly matured, so much that we have essentially evolved higher standards for the condition of REO properties at disposition. Looking back to pre-recession days, REO repairs consisted primarily of the jobs necessary to ensure the safety and security of a property. Otherwise, buyers of REOs mostly accepted them as they came. Disposition strategies were based strictly on a financial decision, so many bank-owned homes were listed and sold as-is, one right after the next. The mindset was very much focused on reducing days-on-market while still maximizing recovery. Today, there has been a significant paradigm shift to evaluate a portfolio's performance as well as how each property contributes to the overall strategy of each bank or servicer. What that means from a servicer perspective is greater investment in each REO property, which positively impacts surrounding communities. More servicers, large and small, are investing in REO repairs and rehabilitation beyond what is required, supporting local communities by spending dollars on improvements that are not necessarily asked of them. One top-tier bank executive recently suggested that as much as 90 percent of his portfolio undergoes active REO repairs. This work, and the purpose behind it, can be defined by three primary categories: Health and Safety | Ensuring the property, both inside and out, is not causing danger to the neighborhood or potential buyers. Cosmetic and Curb Appeal | Making the property aesthetically pleasing for the neighbors as well as for marketing and disposition purposes. Neighborhood-Like Condition | Taking into account how new appliances, flooring, lighting, or other upgrades can remove negative REO stigmas and make the property look the same as conventional homes for sale. National and local efforts to revitalize and grow communities across this country have been nothing short of tremendous over the last couple of years. Likewise, the interest that servicers and others in this industry have taken to be active participants in these efforts is widespread. Understanding that even distressed REO properties can contribute to stabilizing area home prices, servicers are looking to brokers and field service companies for recommendations on how to maximize the positive impact bank-owned properties can have on the community. The proliferation of servicers adopting this new standard will noticeably influence the stability of neighborhoods in 2013. Chad Mosley steers product development, industry relations, sales, customer relationship management, and marketing efforts for Mortgage Contracting Services. He's also played a pivotal role in the company's ongoing expansion initiatives. C O M M U N I T Y R E V I TA L I Z AT I O N LYNN EFFINGER BUSINESS DEVELOPMENT MANAGER Assurant Property Advantage We all know intimately that the mortgage default servicing industry has undergone significant changes over the past several years. Increased regulations and oversight, government-sponsored foreclosure alternative programs, bulk sales of REO properties, foreclosure moratoria, and more have had a dramatic impact. VISIT US ONLINE @ DSNEWS.COM Peering into the future, it is clear to us at Assurant Property Advantage that the overall outlook for the industry's field services segment in the coming year will look similar to 2012, but with increasing responsibility on property preservation providers to deliver timely, quality service. During a presentation given at a recent default servicing industry economic forecast meeting in Los Angeles, Dr. Esmael Adibi of Chapman University indicated that we should see a slow, steady recovery in 2013. He expects annualized GDP growth next year to be an anemic 2.1 percent. Most of the nation's leading economists agree with this point of view. According to a recent Bloomberg Government study, as many as 3.6 million mortgages are expected to enter the foreclosure process during 2013. The demand for quality property preservation will no doubt remain high next year and for some time beyond. With so much attention focused on the negative impact vacant properties have on neighborhoods and communities these days, it is more critical than ever that property preservation be performed correctly to help build a high level of trust and enhance neighborhood stabilization within hardhit communities. In 2013, we expect to see an increase in REO property rehabilitation and repairs to enhance marketability and raise net asset recovery. We also believe that an industry-wide movement could encourage municipalities to accelerate the foreclosure process on vacant properties. Additionally, there will be more focus placed on the need for comprehensive in-field quality control programs. A commitment to improving communication will continue to be the cornerstone of success between all parties involved in property preservation. Lynn Effinger is an industry veteran with more than two decades in mortgage default servicing. At Assurant, he is responsible for supporting and expanding client relationships. There were 1.5 million vacant homes for sale in the third quarter of 2012 and 3.8 million vacant homes for rent, the U.S. Department of Commerce reports. 61

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