Are Outsourcers the Answer in Loss Mitigation?


In the loss mitigation area, one of the key industry trends is a “competition for the right kind of people who have the right kind of experience,” according to Gagan Sharma, president and CEO of BSI Financial.

There is demand in the market for “people who can manage a loss mit team,” he said.

New single point of contact rules that are in the midst of the critical implementation period are partly driving this, said Sharma, who adds that his company will have less adjustment to make than others because it has already been working in the manner required.

“For us, it is business as usual,” he said. “As a special servicer, we had to do this two years ago.”

Those who work with severely delinquent loans know that a “standard servicing model is not going to work for them” and the “larger market has come around to this,” said Sharma, who had been informed at press time that his company was one of the finalists for NMN affiliate Mortgage Technology‘s Servicer of the Year award.

He said while there is a “need and a logic” for servicers to make the transition, but noted that “we haven’t seen it at the scale we expect to happen.”

But, “historically, big box servicers have not had to work that way” and it will be a change to have to transition away from a process where they have calls in a queue to a more one-on-one conversation model.

As a result, he anticipates traditional servicers may address the challenge by outsourcing a piece of it. “Big box servicers may have to work with multiple outsourcers to handle scale,” he said.

For a big box servicer, he said, “it is a challenge.”

Sharma said companies making the change during the transition period would be working out how to train those handling the process and what incentive to offer them. Hiring will come first, he said.

Companies will have to make decisions on, for example, whether incentives should be for performance of the team or individual for deals that they close and what constitutes a deal that is closed, Sharma said. Also how to handle situations where a mod fails and a loan transitions to a short sale.

Because BSI has already worked issue like these out, Sharma said, “For us, it is really about growth and bringing on clients, handling the growth and maintaining the quality.”

He said the company is “looking at certain technology initiatives upgrades to our technology around our servicing system,” upgrading its capabilities in order to handle growth.

“We are looking to upgrade our servicing system,” Sharma said, noting that the company has “enterprise clients” who are “looking for an enterprise-scale system.”

As part of what has been an ongoing expansion the company also recently built out its second servicing center, which is located in the Dallas area. (It also has one in Pennsylvania.)

In addition, BSI this summer expanded into the commercial market.

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