By: Wendy Greenawalt
In my last blog on optimization we discussed how optimized strategies can improve collection strategies. In this blog, I would like to discuss how optimization can bring value to decisions related to mortgage delinquency/modification.
Over the last few years mortgage lenders have seen a sharp increase in the number of mortgage account delinquencies and a dramatic change in consumer mortgage payment trends. Specifically, lenders have seen a shift in consumer willingness from paying their mortgage obligation first, while allowing other debts to go delinquent. This shift in borrower behavior appears unlikely to change anytime soon, and therefore lenders must make smarter account management decisions for mortgage accounts.
Adding to this issue, property values continue to decline in many areas and lenders must now identify if a consumer is a strategic defaulter, a candidate for loan modification, or a consumer affected by the economic downturn. Many loans that were modified at the beginning of the mortgage crisis have since become delinquent and have ultimately been foreclosed upon by the lender.
Making optimizing decisions related to collection action for mortgage accounts is increasingly complex, but optimization can assist lenders in identifying the ideal consumer collection treatment. This is taking place while lenders considering organizational goals, such as minimizing losses and maximizing internal resources, are retaining the most valuable consumers.
Optimizing decisions can assist with these difficult decisions by utilizing a mathematical algorithm that can assess all possible options available and select the ideal consumer decision based on organizational goals and constraints. This technology can be implemented into current optimizing decisioning processes, whether it is in real time or batch processing, and can provide substantial lift in prediction over business as usual techniques.