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 research_request@standardandpoors.com. 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.