Velocity Servicing President Matt Stadler Discusses Loan Stress
MBA NewsLink interviewed Velocity Servicing President Matt Stadler about loan stress. Stadler is responsible for all operations of Velocity Servicing, a specialty and component servicer focused on investors in credit-sensitive products (EBOs, NPL/RPL, and high-risk assets), dedicated to turning distressed loans into performing portfolios faster through high-touch customer relationships and advanced data analytics. Previously, Stadler held leadership positions with Goldman Sachs, Auction.com, Bank of America, and National Asset Direct, Inc. He received his Master of Science Degree in Finance from Texas A&M University.
MBA NewsLink: Are you seeing or anticipating an increase in distressed loans as we move further into 2023?
Matt Stadler: Currently, we are not seeing an increase in distressed loans. During the last 18 months, we have been anticipating a return to normal for foreclosures and serious delinquencies. To date, distressed loans have been artificially suppressed due to COVID programs and an abundance of caution on the part of investors/agencies alike. That said, we anticipate that in 2024 we’ll see elevated delinquencies.
NewsLink: Do LoanCare clients anticipate an increase in distressed loans?
Stadler: Yes, eventually, though they are unsure when the turn will happen.
NewsLink: How has technology changed the distressed loan landscape? Are the warning signs easier or harder to detect in the post-Great Recession era? In the post-pandemic era?
Stadler: Having the right technology helps identify the warning signs. And they are certainly there – but you must know where to look and what to look for. We pay attention to roll rates (rolling from one delinquency level to the next), if homeowners are staying current, if they have gone 30 days delinquent but are maintaining that level by continuing payments, and if not able to catch up, whether they have they fallen further delinquent or if they have caught up entirely.
Considering all the assistance that was offered and/or given to homeowners post-Great Recession or post pandemic, any additional missteps or missed payments likely spell default. Many people were able to take advantage of the assistance plans and workouts offered during the CARES Act. But if they are still struggling today, even with those programs in place, they are more than likely going to end up in default. They were the best options available to them to prevent delinquency and default.
NewsLink: In instances where borrowers avoid dealing with their financial situation, how can lenders help borrowers prevent delinquency?
Stadler: First, lenders should have the proper plan and team in place to assist borrowers. And having proper, well-timed, and frequent communication with borrowers is also key. Borrowers must be reminded of and educated about their options, and what steps need to be taken to avoid default.
NewsLink: Are there loan modifications that can be made?
Stadler: Certainly, however COVID and subsequent CARES remedies, coupled with high rates, have largely exhausted those options.
NewsLink: Time is of the essence; what steps can lenders/servicers take to service distressed loans faster and more efficiently?
Stadler: The initial step should be a “first-time resolution” with a staff member who can clearly identify and educate borrowers on solutions that fit. Then, you should maximize the advantages provided through on-demand data analytics to identify and predict financial risk and opportunity with time to act. Also ensure you have a dedicated team that operates with accountability and transparency to set goals and keep things on pace. It’s also a good idea to have resolutions that motivate and encourage improved performance which align outcomes for the borrower, servicer and the investor.
NewsLink: Every situation is unique. Are there some creative remedies servicers can employ to manage distressed loans?
Stadler: While every situation is unique, the remedies are not unique. The levers a servicer can pull allow for endless customization, but how and when servicers intervene and how quickly they can get the borrower back on track can make all the difference.
NewsLink: Can you tell us about a few unique borrower situations, or a story or example to end this Q&A with?
Stadler: We’re at the intersection of the already but not quite yet. A possible recession and rising delinquencies seem to be a foregone conclusion, but the timing of it all and the severity of that impact remain in question. As delinquencies inevitably begin to increase, the best a servicer can do is ensure it has the right people, systems, and processes in place for early identification and quick resolution.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
