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60 to take a holistic approach—to look at ways to both improve internal processes and experiment with technological solutions in a parallel manner. Brosnan cites as an example work DIMONT has done to help streamline the FHA conveyance process. "By working with the adjacent vendors in the supply chain, we've come up with an end- to-end solution that combines many processes related to property preservation, hazard claims, and the FHA claims process," Brosnan said. "It's more than just technology. We need ways that we can leverage commonality of data and try to be multiple parallel processing while we have the opportunity." As servicers and service providers continue to innovate, so too do the GSEs. Tracy Stephan, VP - Enterprise Innovation, Fannie Mae, pointed to Fannie Mae's Servicing Marketplace as a key enabler of Fannie's work toward building greater efficiency within the housing finance sector. "In the past, match- making between a seller and servicer has taken several months or more for a seller to identify a servicer, agree on the price, and finalize the transaction," Stephan said. Servicing Marketplace was developed to help decrease that timeline, providing all parties with transparent pricing, a standardized process, and standardized data requirements. CRFS' Mowers told DS News that they have seen an abundance of what he called "avoidable errors" that occur during servicers' loss mitigation actions—often early in the process and which aren't identified until much later. "Once realized, the cost of these errors can include curtailment of advances or the rejection of the full claim amount within an audit," Mowers said. "ese 'errors,' which often result in monetary losses, become more difficult to identify as loan populations are transferred from servicer to servicer." Ferreting out these mistakes that are lying dormant in a servicer's inventory can be an enormous challenge, and are something that won't easily be solved by technological innovation alone. It requires an ongoing commitment to examining those internal processes to identify breakdowns and inefficiencies. Radian's Susan Connelly also hit upon this lack of visibility as an issue that stands out for her. "Many servicers have built robust exception reporting that is available but not necessarily shared," Connelly said. "Making sure you're getting all of the information that you can so you have a complete picture of what the default activities and challenges of your specific portfolio look like is critical." Fannie Mae's Stephan explained that one way the GSE is working to help servicers zero in on these problems sooner is through a strong focus on standardizing data and providing better integration through Application Program Interfaces (APIs). "is allows all mortgage industry participants to identify risks earlier in the loan lifecycle, and helps servicers better identify default risks," Stephan said. is focus has included the launch of the Fannie Mae Developer Portal, which Stephan said "promises to streamline processes for lenders at a time when they need to improve efficiencies and cut costs within their businesses." Last year, Fannie also created e Exchange, a free online community designed to allow Fannie to collaborate "with housing innovators across the nation to develop and adopt breakthrough ideas and solutions." Freddie Mac's Gilmore told DS News that it was important to recognize that the landscape of default servicing is shifting fundamentally. "Many institutions no longer want to service default loans, resulting in our defaulted loans being serviced by a smaller group of customers, most of them being non-banks," Gilmore said. How are these new players changing the day-to-day way that default servicing is handled? Gilmore said, "You have people who think differently. ey're faster, more agile, and easier to adapt to change." Gilmore said this change in the landscape is impacting how Freddie Mac pilots its initiatives. "Freddie Mac is focused on updating our processes and technology, based on direct feedback from our servicers, to provide cutting- edge solutions that are faster, simpler, and more user-friendly." "e end goal is to be more thoughtful in how Freddie Mac works with servicers in order to implement new tech while disrupting existing processes as little as possible, and Freddie Mac is committed to making the overall mortgage experience easier, more cost- effective, and more efficient. We are looking at ways to improve the mortgage servicing experience by leading the way through collaboration with our servicers," Gilmore said. "e only way we can move the mortgage servicing industry forward is together." As an example, Gilmore pointed to the area of title. "We knew that we had an issue in being able to market REO properties subsequent to a default, and a lot of it had to do with title," Gilmore said. As such, Freddie is now piloting a direct-title program. "We're looking at procuring title differently, working with our servicers, so that we ensure a better outcome," Gilmore said. "We're on a collaborative journey with our servicers to improve their overall experience. Our servicing partners are critical to bringing about the positive change that we all will benefit from." THE NEXT STEPS While technology is presenting ways for servicers and their partners to build better, stronger, and more efficient systems, those solutions will only succeed if the industry invests in that technology while also closely examining what other aspects of their processes need to be rethought as well. Aspen Grove's Sean Ryan cautions that the the pressure of day-to-day operations can often take priority over addressing underlying issues in order to reduce expense and increase efficiency. "Servicers and subservicers are challenged from an expense and overhead "Machine learning, combined with RPA, could be transformative in our business. However, it will be a continuum and an evolution. There's no one silver bullet." —Gagan Sharma, President & CEO, BSI Financial

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