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ยป VISIT US ONLINE @ DSNEWS.COM 67 The bottom line is that the BPO provider, whether a small mom and pop or a Fortune 500 corporation, should provide the investor with confidence that it has the financial strength and history to sustain its offering and client relationship through a dynamic and risky market. companies with well-established talent acquisition processes and training programs generally have more engaged employees that perform at the highest level. Agent Panel Management Ultimately, a BPO report is completed by a real estate agent with expertise in the subject's specific market. However as history has proven, quality and accuracy vary widely. It is up to the BPO provider first to identify and recruit talented local experts, ensure they are trained on client requirements, and then motivate and retain the strongest performers. Robust metrics, scoring of results, and close management of the panel will ensure the most qualified agent is being selected for each asset. A valuation provider should be able to assign agents based on attributes that correlate with strong NPL valuation performance. Just as an investor needs to partner with a BPO provider that is seasoned in the NPL world, an investor should want their valuation provider to select agents who are experienced with performing BPOs for NPLs. Leaving the agent selection process to chance can mean the difference between being able to sell non-performing assets at the best price available or losing money on the sale. Communication, Quality Control, and Technology Communication and quality should start even before order placement. Companies have a multitude of needs, deadlines, and goals when ordering on NPL pools and providers must be able to flex with changing requirements. Investors should make a site visit and speak with operational team leaders to assess their knowledge and motivation. Investors should also assess whether operations has access to real-time metrics for ongoing performance management and if this front-end support shares the investor's sense of urgency. Examination of the quality control review process is crucial, as this is arguably the most important driver of overall quality. A best practice for any provider is the ability to match clients' reports with reviewers who are expert in the NPL space. e QC review will provide the highest level of accuracy by confirming that the subject and comp data matches the most viable local source such as the Multiple Listing Service. Given today's regulatory scrutiny, it is crucial that BPO providers have access to national MLS information. BPO providers without MLS access will likely struggle to match the data of the subject property with that of comparable properties and may therefore have compliance challenges and/or other downstream problems. QC should also ensure that the investors' guidelines have been met and that a narrative has been provided outlining any discrepancies, variances, or nuances of the subject and its market. Investors should ask potential partners about the percentage of BPOs that are reviewed by an internal valuation specialist(s) and learn if there is automation technology in place to accurately highlight discrepancies, which decrease the likelihood of human error. Find out how often the platform is updated and what specific examples the provider can show where technology has improved critical functions like operations and quality control. e assessment of operational excellence is a key to conducting a thorough evaluation of a provider. Technology Applications and Infrastructure While technological capabilities play an important role in the due diligence of choosing a provider, the security of data must also be evaluated from a risk stand point. Investors should understand the provider's business continuity and disaster recovery plan and learn how often this plan is updated. e provider should also have surge capacity if multiple clients have simultaneous and therefore competing projects. Investors need to ensure that providers are consistently able to perform their work and are not constantly fighting major technological outages. Investors should also inquire about information security protocols and specifically determine if their provider's SSAE 16 certification is in place. Lastly, investors should ask for the most recent audit findings/report in order to determine whether the provider is compliant with the latest guidelines. It is important to keep in mind that the aforementioned best practices are only meant to be a guide as opposed to a comprehensive list. While the NPL market has slowed some, it is will remain an important part of the overall mortgage industry in the coming years. As trends have shown, NPLs will likely grow again, possibly surpassing the 2011 volume levels. Selecting a strong valuation provider is a key to success, so NPL investors should closely examine these risk management and due diligence factors, and choose a provider who will not only meet current needs but will be the best partner in the future. COVER STORY INDUSTRY INSIGHT INDUSTRY INSIGHT