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60 Last year was momentous for the housing industry. e economy tracked well as home prices leapt to highs not seen since the Great Recession and existing home sales beat expectations with a sharp rise at the end. Not all went smoothly for servicers, however, especially the largest and most well-known institutions. According to a January servicer handbook report by Fitch Ratings, servic- ing portfolios shrank for the Big Four—Bank of America, CitiMortgage, JPMorgan Chase, and Wells Fargo. e organization noted that Wells Fargo acquired billions of dollars in mortgage servicing rights from a competitor that could "ulti- mately lift [its] portfolio size," but that assessment feels like an exception to the rule for what awaits the industry in 2018. As Fitch Ratings analysts wrote in their hand- book, "Basel III and ongoing regulatory scrutiny are leading big U.S. banks further away from ser- vicing residential mortgage loans while nonbanks swoop in and beef up their portfolios." No man is an island—and neither is any com- pany in the financial services business. Servicers are adopting new technology that helps them reach more borrowers more effectively, but they're also running up against compliance costs and rap- idly shifting political winds that will likely shape the marketplace in 2018 and for years to come. We canvassed the industry and spoke with experts to learn who's bracing for waves, and who's ready to surf. AN UNCERTAIN CLIMATE FOR COMPLIANCE Ask most default servicing executives, and they'll tell you the weather they're concerned with is the cloud of uncertainty hanging over Wash- ington and state houses this year. With a change in administration came a change in philosophy regarding many of the regulations that had guided servicers since the housing crisis. Moreover, with midterm elections looming, the road ahead is filled with even more possible curves. ings certainly weren't supposed to shake out this way. Just before the year-end, Republicans successfully passed their tax reform bill, one of the pillars of President Trump's campaign. Earlier in the year, Rep. Jeb Hensarling (R-Texas)—one of many Republican congressmen retiring in advance of the 2018 midterms—shepherded the Financial Choice Act through the House in a bid to modify regulations put in place by the Dodd-Frank Act in 2010. With Hensarling relinquishing the chairman- ship of the House Financial Services Committee, news outlets suggest that Rep. Maxine Waters (D-California) could take the role, if Democrats gain control of the lower chamber. at would be a change in management with real possible conse- In 2018, default servicers will face waves of change. Employing new tech options and expanding market share can help servicers prepare for all market conditions. C O V E R S T O R Y / R Y A N S C H U E T T E 60