TEXT-S&P: shifts in resi servicing practices redefine trends
Nov 13 - Standard & Poor's Ratings Services has reviewed residential servicer data from its Servicer Evaluation Analytical Methodology (SEAM) questionnaires since December 2007 to determine trends in the industry over the past five years, and published its findings in a recent report. "During the past few years, residential mortgage loan servicing has undergone numerous changes," said Standard & Poor's servicer analyst Monica Perelmuter. "When delinquencies, defaults, and losses were low, servicers focused on new loan boarding, payment processing, customer service, and early-stage collection efforts. As they rose, servicers shifted their focus to late-stage collection efforts, loss mitigation efforts, foreclosure administration, and management of real-estate-owned (REO) properties. The residential servicing industry continues to evolve and implement revised servicing standards and processes." While servicers indicated that they have invested in technology and added to staff, the rate of increase in delinquencies made it difficult for some of them to maintain their servicing levels. "Regulators, investors, bankruptcy court judges, states, and industry participants began to scrutinize servicing practices, processes, and controls, including the foreclosure affidavit process. Servicers continue to modify their systems and processes to comply with regulatory requirements or incorporate industry best practices," Ms. Perelmuter said. The report also noted that delinquencies have begun to decline, while the foreclosure and bankruptcy buckets continue to increase. Home prices have begun to stabilize, but eviction timeframes continue to rise and, and along with increased servicing costs, have partially been contributing to rising loss severity rates. "We believe the residential housing market has shown recent signs of stabilization but recognize that servicing remains challenging for mortgages originated before the housing market downturn," Ms. Perelmuter said. "We will continue to monitor the effects on the servicing metrics we request and will periodically publish summary statistics from our SEAM database and our views of trends developing in the residential servicing market." The full report, "Focus On Servicing: Shifts In Residential Servicing Industry Practices Redefine Trends," was published Nov. 13, 2012, on RatingsDirect on the Global Credit Portal. The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to firstname.lastname@example.org. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.