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» VISIT US ONLINE @ DSNEWS.COM FIVE MINUTESBoardroom WITH Get to Know Industry Executives Beyond the Ed Fay FOUNDER AND CEO OF FAY SERVICING With more than 13 years in the financial industry, including tenures with HSBC and Countrywide, Ed Fay's expertise spans non-prime originations, servicing, and borrower credit management. As he witnessed the housing crisis unfolding, Fay knew the path forward would require a more borrower-centric servicing approach. From that ideal, Fay Servicing emerged in 2008—a special servicer managing distressed and at-risk residential mortgages for banking institutions and alternative real estate investors. What prompted you to establish a servicing organization in the middle of a housing crisis? I went from a portfolio lender to a securitized lender in 2004, and it was really an eye-opening situation. I was quite confident that a collapse would happen; it was just a matter of when. So I basically started working on my business plan at that point. The irony in how we set up the firm is that we didn't do anything new; we actually did something that was old. We wanted to be a servicer that knows its borrowers, that cares about its borrowers, and that is there for its borrowers, which was very different from what a lot of people were doing at the time. It's more like the approach of a 1950s or 1960s finance company; it's how servicing used to be done. What is your approach to working with distressed borrowers in today's economic environment? In this business, it's important to recognize that people aren't looking for a handout, they're just looking for a hand. When you realize that people simply have a change of circumstance or a life event that's made it difficult to make their payments, it's just a matter of working with them around that situation. We do cash flow modeling and budgeting for borrowers, and we focus on how much money's coming in versus how much money's going out more than anything else. This results in much more effective mods, because the worst thing you can do is give someone false hope by giving them a mod they can't afford. I think that's one of the reasons—despite the fact that we have some of the most difficult loans on the market—our redefault rate is less than 10 percent. What's the biggest regulatory change impacting the industry today? The largest change in this industry is the inclusion of the Consumer Financial Protection Bureau (CFPB). We've been spending a lot of time with the CFPB, and quite frankly, as an industry, we earned that oversight from past mistakes. Servicers have spent a lot of time and effort putting together gap analysis of the CFPB's first round of changes, but I think the full impact remains to be seen. The CFPB does a good job of working with us servicers to make sure we're going to be ready for their changes, and they've been fairly responsive to the industry's concerns about the rules. What advice do you have for others working in the mortgage space in today's marketplace? My first piece of advice is be willing to make a change from what you've been doing. For people in originations, servicing isn't a bad place to be, especially specialty servicing. Our primary focus in hiring is on mortgage originators, because we think they make the best special servicers. My second piece of advice—and this one is more for companies—is look for a niche. Don't try to be all things for all people. The big players are going to take a good portion of the space, so try to find what you're best at and stick to that. 31

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