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» VISIT US ONLINE @ DSNEWS.COM 57 distressed asset management processes. Lastly and closely tied to the compliance imperative, asset managers must increase their orientation around the consumer, whether we're talking about a borrower going through the pre-foreclosure process or the potential buyer of an REO property. Banks, servicers, and regulators will continue to raise the bar on how these consumers are cared for throughout the process. Providers must demonstrate that they understand the consumers and are providing transparency, fairness, and responsiveness in every interaction. e market for distressed homes has changed, with investor interest waning and the need for move-in ready, FHA-eligible, owner-occupant product growing quickly. Providers who maniacally focus on consumer needs and provide strong customer-facing processes will be at an advantage–borrowers, first-time homeowners, communities, banks, and servicers will benefit, as will the asset managers themselves. ASSET DISPOSITION RICK SHARGA Executive Vice President at Auction.com For asset management companies and organizations that specialize in distressed property disposition, 2015 looks like it's going to be a classic "good news/bad news" kind of year. e good news is something that can only be considered good news by those whose businesses depend on a reliable stream of foreclosed properties. Following years of steady decline after the foreclosure crisis peaked in 2010, it looks like foreclosure sales and the inventory of REO homes are both going to increase in 2015. is is not a sign that we're in the early stages of another wave of foreclosure activity; quite the contrary, in fact. What's happening is that thousands of seriously delinquent loans which should have been foreclosed on years ago are finally making their way through the process. A recent report from RealtyTrac spells this out clearly: over 78 percent of all loans in foreclosure are loans that were originated in 2008 or earlier. e borrowers in many cases haven't made a mortgage payment in two or three years. eir loans have finally made their way through the Byzantine process put in place by well-meaning regulators, legislators and judges, and are finding their way to foreclosure auctions or back to the lenders for disposition. e bad news comes in the form of two important points about this inventory: First, it will be very regional in nature and skewed heavily toward judicial foreclosure states. New York, New Jersey, Florida, Illinois, Massachusetts, and Maryland are among those that have enormous backlogs of delinquent loans to process. Among non-judicial states, California and Nevada will probably see a slight uptick in inventory as well, as legislative measures that delayed foreclosures over the past two years wind down. Second, it will be very short-lived. ere is virtually nothing new coming into the distressed pipeline. Loans originated between 2012 and 2014 are performing twice as well as history would suggest. Foreclosure activity for these loan vintages is running at less than one half of one percent. Once the backlog is worked through, probably sometime in 2016, there will be fewer distressed properties than the industry has seen in well over a decade. It's likely that we'll see consolidation in the industry, and the long-term survivors will be those companies who carve out market share from competitors and begin the process of re-inventing their businesses to provide new products and services for a market no longer in the throes of distress. COMPLIANCE MARIA MOSKVER Chief Compliance Officer at Walz Group Across the industry, as banks and servicers come to terms with new regulatory demands, compliance is moving into a new phase. e regulators have made their intentions clear. We know, for the most part, what their expectations are and how they operate. And in 2015, we will see greater enforcement of the regulations that they spent the last several years drafting and enacting. is will be the year when mortgage servicers must perfect their implementation. If 2014 was turbulent in the realm of compliance—and it was—2015 is shaping up to be equally trying for the industry's banks and servicers. We expect to see more COVER STORY SPECIAL FE ATURE INDUSTRY INSIGHT INDUSTRY INSIGHT EXPERT OPINION "If 2014 was turbulent in the realm of compliance—and it was— 2015 is shaping up to be equally trying for the industry's banks and servicers. We expect to see more CFPB investigations and more coordination between the Bureau and state regulators, likely leading to more state investigations as well. –MARIA MOSKVER

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