TheMReport — News and strategies for the evolving mortgage marketplace.
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FEATURE Se r v ic i ng Or ig i nat ion SERVICING both private-label and agency. The RCS capital markets team has developed data-driven modeling and analytics in support of MSR valuations, leveraging the feedback from our historical servicing experience to value MSRs on legacy portfolios, new issue MSRs, and MSRs on purely delinquent portfolios. M // What are RCS' key differentiating factors between RCS and its competitors? s e c on da r y m a r k e t a na ly t ic s RCS // RCS has committed sig- nificant time and effort in complying with evolving servicing standards including the recent Department of Justice settlement. The company also employs a level of discipline when contacting clients, which results in RCS reaching approximately 78 percent of 60-plus-day delinquent borrowers within 60 days of transfer and approximately 94 percent of borrowers less than 60-plus days delinquent on their mortgage obligations. To complement the outreach successes, the industry-leading contact rates and effective pipeline management result in executing loss mitigation strategies on more than 47 percent of loans that ever become 60-plus days delinquent. Of those, 35 percent of solutions are full reinstatements. RCS remains a top performer in the key metrics the U.S. Treasury applies to measure servicer performance of the top nine servicers, by volume, under the Making Home Affordable program, and with extensive upfront modeling to identify likely resolution strategies including review and analysis of each 60-plus-day delinquent asset prior to servicing transfer, develops the initial loss mitigation approach. The company applies the appropriate staffing ratios to ensure intensive coverage and high borrower contact rates and has experienced and highly trained loan counselors and loss mitigators that initiate borrower contact efforts within hours of servicing transfer. Daily analysis of borrower contact efforts and loss mitigation pipeline reports ensure goals are met. And, when necessary, face-to-face borrower outreach when borrowers can't be reached through conventional methods happens. RCS is constantly updating real estate market and timeline information, as well as state-ofthe art systems and net present value decision tools. M // What key trends is the company focused on near- and long-term? RCS // RCS knows that compli- ance is the name of the game in today's climate, and as a result, compliance will drive all decisions. The company has implemented a comprehensive compliance program to ensure all mortgage servicing and supporting processes are conducted as required by law. The compliance program RCS has implemented will answer key questions such as how will compliance impact banks using subservicers and if the cost and compliance risk to monitor the subservicer exceed the benefit of using a subservicer. The company also pays attention to how midsize nonbank servicers stay relevant as the large get larger and if there is a future for the niche servicer without a balance sheet. Origination drives the mortgage business, and servicing is the by-product. Banks will always originate, but the impact of the nonbank originators is still unknown. And ways that nonbank originators fund their business, as well as private equity, public company, REIT, and securitization, Fannie and Freddie will change the way they do business, risk-based pricing, modified G-fees, securitization, and these changes will undoubtedly have an impact on the industry, particularly the economics of originators and servicers. Finally, those who have access to competitive and reliable capital, the ability to be nimble, and the desire to make measured risk into a business as opposed to a trade will be the ones successful. M // From a near- and long-term development standpoint, how will RCS continue to hone its position in the marketplace? RCS // Continue to leverage its special servicing infrastructure for servicing or sub-servicing legacy portfolios. Our market position provides an attractive opportunity to acquire mortgage servicing rights, legacy and new issue. As nonperforming loans work their way through the process, we see opportunities with mortgage lenders who will need servicers like RCS to assist them. "RCS knows that compliance is the name of the game in today's climate, and as a result, compliance will drive all decisions. The company has implemented a comprehensive compliance program to ensure all mortgage servicing and supporting processes are conducted as required by law." 54 | The M Report