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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Default Management Isn’t Enough

by Kristin Moyer  |  September 23, 2009  |  1 Comment

While GDP is returning to growth in many countries and some economists and government agencies are declaring “recovery,” tell that to the banking industry. Significantly more losses are set to occur in the banking and investment services industry (sources IMF, McKinsey and others), particularly in the area of residential mortgage, commercial real estate, credit cards and consumer loans.  Against this backdrop, bank failures, particularly in the US, are surging.Picture3

Source:  FDIC, Gartner (September 2009)

Financial institutions must find a better way to reduce pending loan losses or risk failure.

Financial institutions are largely fighting their way through the financial crisis by leveraging default management and loss mitigation solutions.  However, the primary function of loss mitigation is not to proactively identify distress, but rather to deal with a default on payment after it has occurred.  To prevent loss, lenders must have a mechanism to prevent default in the first place.  They must have a means to reduce the risk of re-default on modified loans and price distressed assets.

Loan portfolio management applications leverage analytics and modeling capabilities to price distressed assets and proactively identify distress – which, once identified, can then be handled by loss mitigation applications.

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Category: operations     Tags: ,

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  • 1 Loan Portfolio Management in the US Mortgage Industry – What About HAMP?   September 28, 2009 at 12:44 pm

    [...] Loan portfolio management in the US residential mortgage industry has hit a speed bump.  The Home Affordable Modification Plan (HAMP) uses a rule-based formula for driving the terms of a modified loan to 38% debt-to-income (DTI) ratio, with the Treasury matching further reductions in payment to 31% DTI for the borrower.  This leaves no room for intelligent loan level decisioning that takes into account borrower behavior as a proxy for capacity to perform in a loan modification.  So why should the US mortgage industry use loan portfolio management? [...]