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39 » VISIT US ONLINE @ DSNEWS.COM FHA PORTFOLIO SOLUTIONS: A DEFAULT TO DISPOSITION STRATEGY As default volumes continue to decline, mortgage servicers nationwide are now focused on bringing profitability back to the business of servicing mortgage loans. e question is, how? e average cost of servicing loans in default is at an all-time high due to an extremely robust regulatory environment. How do you improve and streamline efficiencies while cutting costs when managing assets through the entire default lifecycle? THE CHALLENGE One of the most challenging and costly responsibilities a servicer must face is maintaining the collateral value of real estate assets in default. While the volumes currently are certainly more manageable, the complexity of managing these properties has become increasingly more difficult. In fact, the risks have grown considerably as local municipalities and other regulatory agencies have become more involved in combatting blight. Many of the difficulties servicers faced during the financial crisis were not only managing the rapidly increasing volumes of mortgage loans in default, but also the increasing relationships with third-party providers that could deliver resources in the field to provide property inspections, preservation, managing code enforcement violations, hazard claim recovery, and of course real estate professionals and auction companies to market, as well as disposing of these assets. is required mortgage companies to develop an enterprise vendor management platform that could manage the oversight of the increasing layers of vendor relationships required to meet these obligations. For loans guaranteed by the FHA, there are additional requirements to convey the property to HUD once the foreclosure process is completed. is is assuming the property did not sell during the foreclosure sale nor received an acceptable third-party bid during the CWCOT (Claims Without Conveyance of Title) second chance program. FHA loan servicing requires an intense focus on meeting pre-established timeframes for events such as the first legal action and conveyance deadlines. Managing timelines and costs can be a daunting task when servicers are relying on multiple vendors to provide insight into a specific property. e obvious question is how do we get all of these business partners to communicate efficiently and work toward the same goal? THE SOLUTION It takes innovative technology and a consistent laser focus on execution to meet the challenges servicers face today when managing properties in default. In an effort to solve for these challenges, MSI, Williams Worldwide Auction, and I Property Claims, in joint collaboration, have developed a process to manage assets from "Default to Disposition." e FHA Portfolio Solutions will substantially reduce risk and improve servicers' ability to protect and dispose of assets in default. ese solutions were developed to solve for the multifold challenges created by inherent process gaps, lack of communication between vendors, and non-aligned process strategies. One provider with the ability to manage the process of inspecting and preserving properties, managing recovery of insurable losses, resulting repairs, and the ability to dispose of these assets through the real estate auction process is a "game-changer" for the industry. Replacing three separate vendor relationships with one vendor relationship unquestionably improves the ability to ensure accountability. e FHA Portfolio Solutions effectively eliminate these process gaps, solve for the communication errors, and align process strategies to meet the needs for all mortgage servicers managing FHA portfolios. To add to this value proposition, MSI, Williams Worldwide Auction, and I Property Claims have also developed the technology to provide operational insight and controls for inspection, preservation, hazard claim recovery, and auction data in one secure system. e Single Source Client Portal is a client-facing system that provides actionable data that can be deployed for use in property preservation, loss recovery, gain/ loss analysis, and property disposition planning. CONCLUSION With default volumes currently at manageable levels, now is the time for mortgage servicers to consider re-engineering internal processes/controls and engage partnerships with providers committed to meeting these challenges with state-of-the-art technology, best-practice methodology, and who are willing to take ownership of their results while indemnifying their clients from errors committed in the field. Sponsored Content "One of the most challenging and costly responsibilities a servicer must face is maintaining the collateral value of real estate assets in default. While the volumes are certainly more manageable, the complexity of managing these properties has become much more difficult."

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