Magazine article Mortgage Banking

Servicing Hurdles

Magazine article Mortgage Banking

Servicing Hurdles

Article excerpt

The servicing department will be tested this year--no doubt about it. Across the board, loan types are kicking up more delinquencies and foreclosures. Investments that servicers have made in staffing, technology and loss-mitigation communication practices will all prove their worth in 2007. It is the year that the origination side of the business finally drops from the limelight, and servicing emerges for its periodic moment in the spotlight.

But the task at hand for servicers will not be easy. Consider the following statistics from the most recent National Delinquency Survey (NDS) published by the Mortgage Bankers Association. During the third quarter of 2006, the NDS found that for all loan types, the states with the biggest jump in overall delinquency rates on a year-over-year basis were: Michigan, Rhode Island and Ohio. In Michigan, delinquency rates during that one-year period spiked by 135 basis points, while in Rhode Island the increase was 128 basis points. The NDS also noted that the top three states in terms of foreclosure inventory rates were Ohio (3.32 percent), Indiana (2.90 percent) and Michigan (2.20 percent).

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There is no question that delinquencies have jumped significantly, especially for subprime loans. …

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