Loss Mitigation

Default Setting
Banks need to face the fact that neither government programs nor the market’s inherent resilience are going to prevent unprecedented numbers of defaults in the residential real-estate market. In the face of likely borrower behavior, they need to develop strategic, loss-mitigation-based loan-modification initiatives. This is the prime way to get loans performing again, to reassure customers and shareholders, and to stabilize the market.

Capco has identified four key elements of effective mortgage loan loss mitigation:

• Sharpen your analytics. Lenders need to reconsider the traditional approach to assessing a borrower’s ability (and willingness) to pay. By helping to implement advanced analytics, we accurately determine portfolio exposure and risk stratification. Determining the process volume for individual loan modification strategies provides a baseline for identifying potential bottlenecks and optimal resource levels.

• Get the right data. Make sure that you are gathering the most relevant, accurate and timely data, both within your organization and from third parties. Then use this data to feed more sophisticated analytical tools. Better data enables better decision-making, and Capco can help you to build data marts with well-defined table structures that feed analytic models and improve data quality.
• Use technology to scale processes. Double-digit delinquency rates have pushed service models to breaking-point. We can help you to identify suitable partners to provide new servicing capabilities around loan modifications, or offer variable staffing capacity to relieve overworked teams.
• Get it right the first time. Automated analytical tools flag problems faster and improve your analytical productivity, allowing you to enhance risk management and create strategic business value.

Our project teams of seasoned professionals offer valuable and distinctive insights into loss mitigation – another way in which Capco is forming the future of finance.