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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 42 August 2024 F E A T U R E S T O R Y THE BEST SOLUTION IS NOT ALWAYS THE SHINY NEW TOY While it can be debated as to how much default and foreclosure activity lies ahead, default servicers must carefully examine their tech systems to keep ahead of the curve. B y J I M M Y L E W I S & S R I D H A R L O G A N A T H A N A fter years of record low default and foreclosure volume, any significant new default servic- ing volume could be called "a spike." But with a number of COVID- 19-era assistance programs coming to an end, and the continued presence of chal- lenging consumer financial pressures, it appears default servicers will soon be managing increased demand. In fact, some already are, with ATTOM's January 2024 U.S. Foreclosure Market Report reporting that there were more than 30,000 foreclosure filings in January. That's up 10% from the previous month, and 5% year over year. A stubbornly high cost of living and other sustained financial challenges also suggest that homeowners will be under pressure for the short-term future. Redfin recently reported that monthly mortgage payments in 2024 are roughly $250 high- er than they were in 2023. While it can be debated as to how much default and foreclosure activity lies ahead, there is no doubt that default ser- vicers, long accustomed to lean operations and low volumes, are now confronted with a potential pivot. As is the case with any market rebound, firms could quickly be faced with inadequate resources to manage any level of order surge, resulting in slower turnaround times, lapses in customer service or worse. On the other hand, although the indicators are there, it is not set in stone that 2024 will be a year of massive fore- closure volume. What's a servicer to do? Gamble on uncertain revenues and invest in modern technology to manage the anticipated volume? Or, hold steady, stay lean, and risk being overwhelmed by a spike in volume? The options of chasing expensive technology or risking operational chal- lenges by standing pat are not the only choices for default servicers. As the mort- gage origination industry has recently learned, the best technology is not always the latest, flashiest, and most expensive. It is not always expensive to audit one's existing operation and craft a strategic plan that possibly includes upgrading technology in affordable stages. And it is entirely possible for servicers to update their operations now, making them more scalable and flexible, without necessarily breaking the bank. Start by Evaluating What You Already Have O ne of the most effective approaches to modernization is to take a critical look at your existing systems. Most servic- ing companies likely already have capable technology platforms, although they may not be making optimal use of them. Con- versely, they may have a tech stack that has overlapping or redundant functions and capabilities. That said, with a comprehen- sive and objective evaluation, servicers can take the first steps toward preparing fully for any spike in order volume. Any effective audit should start with a careful review of existing platforms and other elements of one's tech stack. There is a good chance some of the solutions that have been earmarked for certain, specific functions may have additional features or modules that can be activated to address new requirements or expand a firm's scope of automation. With the help of their technology providers, default ser- vicers seeking to optimize their automa- tion can then train their teams to utilize these untapped capabilities, essentially J I M M Y L E W I S is the CEO and Co-Founder of TrueFocus Automation, a Dallas-based provider of custom software bot development and automation-as-a-service solutions to the title and mortgage industry. He can be reached at jimmy@truefocusnow.com. SRIDHAR LOGANATHAN is the COO and Co-Founder of TrueFocus Automation, a Dallas-based provider of custom software bot development and automation-as-a-service solutions to the title and mortgage industry. He can be reached at sridhar@truefocus- now.com.