Magazine article Mortgage Banking

The Unemployment Factor. (Portfolio)

Magazine article Mortgage Banking

The Unemployment Factor. (Portfolio)

Article excerpt

SERVICERS WILL EARN THEIR MONEY IN 2002. FACED WITH RISING DELINQUENCIES, hedging complexities, lingering prepayments and a recession, the servicing department will be busy this year.

In last year's third quarter, delinquencies already were ramping up. The delinquency rate had marched from a recent low of 3.74 percent in the first quarter of 2000 to 4.87 percent as of Sept. 30, 2001. And now that we are officially aware of being in recession, and the layoff announcements are becoming more routine, we are being told to expect more troubled loans. The Mortgage Bankers Association's National Delinquency Survey (NDS) for the third quarter states: "... we should expect a modest increase in delinquencies ahead." That might be the good news--a modest increase.

But the mortgage servicing business has made impressive inroads with loss-mitigation practices that are preventing loans from drifting into foreclosure. A veteran mortgage servicer, Jeff Briggs, executive vice president, Wendover Financial Services Corporation, Greensboro, North Carolina, says, "I don't think the mortgage industry has ever been better-equipped to deal with a recession."

But what about all the equity stripped out of newly refinanced mortgages in 2001? …

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