We have learned many lessons in this unprecedented mortgage market with regard to servicing loans. We have learned that you can't make loans to people who lack the capacity to pay them back and expect them to do so. We have learned that the more equity a borrower has in the property, the more likely he or she is to make good on the obligation. And we have learned that servicing loans passively is a pretty good way to end up with a lot of foreclosures. It has been painful, as learning experiences go, but the lessons gained will serve the industry well for a long time to come. We are servicing loans now more in the traditional nonprime fashion, which is to say that we are proactive in our approach, looking for indications of potential defaults. The lender that services by waiting for loans to become seriously delinquent before taking any meaningful action is destined to become a statistic, and not in a good way. The future belongs to those who monitor their portfolios carefully, look for warning signs and handle borrower inquiries with experience and positive action. The days of sending out a polite letter at 30 days' late, another letter at 60 days and a phone call two weeks after that are gone with the wind--relics of the unlamented lending era just past.
