37
technology to improve customer experience and
reduce costs. In 1995, Pulte began centralizing
operations and standardizing core mortgage
processes using a digital workflow vertically inte-
grated system that coordinates functions between
construction, loan services, and affiliate closing
services (title and insurance). About 95% of Pulte
customers opt to complete the application process
online and then use dashboards provided to them
to track progress. Estimates for cost savings range
between 10–51%.
DIGITAL PLATFORM DEFAULT
SERVICING: A WORK IN PROGRESS
While demand for new loans and refinances
is the lowest in 22 years, loan servicing volumes
are near pre-pandemic levels as borrowers have
been exiting forbearance programs, and foreclo-
sure proceedings are up 132%.
7
Default servicing
costs are almost 10 times more expensive than
the cost of servicing a performing loan, and thus
default servicing could benefit from the efficien-
cies found in digital systems. Capital investment
is reflecting more and more commitment to
digital innovation in the servicing, especially
default serving industries, where legacy systems,
spreadsheets, and manual interaction is still the
norm. Many servicing processes are slow, manual,
fragmented, and ripe for disruption.
One trend to facilitate the use of digital
technology in servicing appears to be growth in
subservicers using digital platforms because lenders
and investors often lack internal servicing capacity
and prefer to outsource servicing while retaining
mortgage servicing rights. Also, outsourcing ser-
vicing to subservicers shifts regulatory compliance
requirements to subservicers, as well as allows
servicers to avoid investment in technology, given
the capital required for servicing. In the past two
to three years, subservicers using digital technology
and artificial intelligence have increased efficiency
in the default space while improving borrower
experience and strengthening compliance.
8
Much
more work is needed, as the focus thus far appears
to have been on originations and closings, with less
focus on backend operations, including servicing
and default servicing. It bears repeating: improved
use of digital technology in default servicing is ripe
for disruption. ink about solutions offered on
Amazon and Overstock apps.
As Managing Partner of
Gilbert Garcia Group, P.A.,
Michelle Garcia Gilbert
handles a wide variety of legal
matters for the firm and has
substantial litigation experience
in both default and non-default cases, including jury
and non-jury trials, motion practice, and appellate oral
argument, throughout the state of Florida. She has
managed the firm's expansion into probate, estate
planning, business transactional, and corporate law.
She practiced real estate and business law since 1989,
specializing in default servicing legal work, including
litigated foreclosures, real estate closings, evictions, and
commercial litigation.
7
https://sf.freddiemac.com/content/_assets/resources/pdf/other/freddie-mac-future-of-lending.pdf; https://www.worldpropertyjournal.com/real-es-
tate-news/united-states/irvine/real-estate-news-2022-home-foreclosure-data-attom-q1-2022-us-foreclosure-market-report-rick-sharga-bank-foreclo-
sure-filing-data-for-2022-13077.php
8
https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/five-trends-reshaping-the-us-home-mortgage-industry
