Kristin Moyer

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Kristin R. Moyer
Research Director
11 years at Gartner
18 years IT industry

Kristin Moyer is a research director in Industry Advisory Services/Banking and Investment Services. She has more than 17 years of experience across the global high-technology industry in a variety of roles. Ms. Moyer's research coverage includes card… Read Full Bio

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Using Technology to Help Homeowners Keep their Homes

by Kristin Moyer  |  February 24, 2009  |  1 Comment

I don’t live in California, Florida, Arizona or some of the other markets that have been hardest hit by the mortgage crisis.  In fact, right now there’s only one home for sale in my neighborhood, and it’s not a foreclosure situation (at least not yet).  But, on a national and global basis, the numbers are staggering.  Financial loss from the credit crisis may reach $3.6 trillion in the US (source:  Roubini, 2009).  Foreclosure is resulting in enormous loss for servicers, investors and consumers (source:  “Deliveraging American Homeowners, White, December 2008):

  • Average home foreclosure loss was $145,000 as of December 2008, or 55% of the outstanding loan balance
  • Loan modifications are increasing, not reducing, debt:
    • Reduced monthly payments:  35% of modifications
    • Monthly payments remained the same:  20% of modifications
    • Increased monthly payments:  40% of modifications (average capitalized amount added to loans:  $10,800 (on an average mortgage of $210,000)

This data reveals that helping homeowners stay in their homes is better for servicers, investors and of course the homeowner.  The global economy will struggle to recover until more homeowners are able to keep their homes.

Advanced mortgage analytics can help.  It supports portfolio stress testing, fraud modeling, pricing analytics, prepayment risk and new mortgage application risk.  Even more importantly in this financial crisis, it supports distressed portfolio management, loan modification risk and distressed loan pricing.

Advanced mortgage analytics is important because early identification of distressed loans can reduce loss, particularly when the focus is on home retention.  Industry estimates are that less than 50% of homeowners going into foreclosure have talked to their servicer.  Servicers need to proactively engage with distressed homeowners and modify loans as appropriate.  They need to understand why a modification has been rejected and also what the risk of re-default is on modified mortgages in order to reduce further loss.  Advanced mortgage analytics can support these activities by identifying loans that are in distress, modification options and risks and the cash flow impact of foreclosure.

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