November 13, 2012 / 9:06 PM / 5 years ago

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 

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 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 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 
Members of the media may request a copy of this report by contacting the media 
representative provided.
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