Press Release: The Top Six Questions to Ask Your Servicer

SAN DIEGO, Dec. 8 /PRNewswire/ -- The world of finance is changing in almost every sector, and nowhere is that change more obvious than in the loan servicing industry. To address the need for investors to choose their new servicer wisely, Doug Henkel, CEO of national loan servicer First Associates, Inc. recently shared some key servicer questions with the California Mortgage Bankers Association (CMBA).

"In the past, servicing was often considered a commodity--even an afterthought," explains Henkel. "Price was all-important, and investors wanted servicing done as cheaply as possible. Many critical phases were outsourced internationally, and operations were tightened. This worked well in an era of low delinquency and high employment, but we're facing a far different situation in the current economy."

According to Henkel in his article What to Look for In a Servicer, servicers must re-tool and change processes so that they match the needs of their investors' portfolios. Investors, for their part, must choose their servicer not solely on brand-equity and pricing, but on factors such as experience, technology, methodology and capacity.

These attributes can often be discovered through the following six questions:

• What's the Delinquency Rate of your current portfolio? Simply stated, you cannot expect your servicer to manage your portfolio effectively, if they don't stay on top of their other portfolios.
• When was your last technology or software upgrade? After a cycle where price was king and cost efficiencies ruled the day, many servicers are not updating their platforms. Make sure yours has.
• What's your Servicing Strategy... and what did it used to be? Going from "low-cost" to "high-touch" may sound like a smart move, but it represents a significant operational change.
• Can you really do all you say you can, at those pricing levels? In order to be successful, today's servicer must engage in several time-consuming and non-outsource processes - processes that may not have been necessary several years ago.
• How long have you been in business and how strong are your financial statements? After checking to see what experience your prospective servicer has, ask to see a copy of their financial statements.
• Are you the right size for my needs? This takes careful reflection before you seek out a servicer. If you have a portfolio full of problems and work-out issues and you want special attention, you may want to consider a smaller servicer with a "clean plate."

To review the entire article at the CMBA website, go to www.cmba.com/new/newsletters/09/CMFN-Fall09.pdf.