Fiserv Inc. developed its newest suite of services on the theory that lenders might be able to stem mortgage defaults if they can identify troubled borrowers before they fall behind on their payments.
The Fiserv Prism and Home Retention Solutions suite is aimed at parsing financial databases to determine which borrowers are making payments but may run into trouble.
"The foreclosure problem is going to get worse. It's not going to get better anytime soon," James L. Smith, the executive vice president of portfolio services at Fiserv Lending Solutions, said in an interview. He said he expects a "tidal wave" of foreclosures next year, because more adjustable-rate mortgages will reset this year.
Lenders are making a bad situation worse by pursuing foreclosure instead of restructuring troubled loans, Mr. Smith said.
The Brookfield, Wis., vendor's Prism tool set is meant to predict the likelihood that a borrower will fall behind on payments. (Prism stands for "Predictive Risk Index Score Modeling.")
For example, he said, the software can track consumers' credit ratings to measure "FICO drift," where a credit score is falling but the borrower remains current on the mortgage.
The software also looks at Fiserv's Case Shiller Home Price Index, which monitors market conditions to show where home prices may be falling, as a risk factor for borrowers. Even customers with good credit might be at risk of default if property values in their region fall so much that their houses are now worth less than they owe, Mr. Smith said. "It's not a mortgage type that makes them delinquent. It's an equity issue."
Other factors that play a role in Prism's analysis include property type and price, geographic area (in some cases at the ZIP code level), and various forms of risk scoring.
The suite lets Fiserv default management experts offer the lender alternatives to foreclosure, such as a loan restructuring, which can be customized according to the loan type and the borrower's state.
Also, Fiserv's call center can reach out to borrowers to discuss the terms of their loans, Mr. Smith said. "Everyone we had doing [back-office] origination work has been retasked to do this work."
Urban Settlement Services LLC, a Pittsburgh vendor management company partly owned by Fiserv, has been using the service since March to handle loan modification and fulfillment work for Countrywide Financial Corp., he said. "They brought us in as a SWAT team to deal with this problem."
Countrywide, which Bank of America Corp. is buying, did not respond to requests for comment.
Mr. Smith said Fiserv has been asked to present its suite to Hope Now, a group of bankers and other mortgage industry participants promoting workout plans.
"Some of the recent programs they are offering seem to be helping," he said. "I think there needs to be more of that."
Kristin Moyer, a research director at the research firm Gartner Inc., said the mortgage market needs innovative ways to halt the downward spiral in real estate.
"We're seeing people who have a 750 FICO score walk away from their homes, because they have no equity," she said. "The industry needs to get creative about getting in front of people."
Other providers offer some elements of business process outsourcing and analytical tools, but Fiserv's combination provides flexibility to the various stakeholders, Ms. Moyer said. "The delivery mechanism can be really focused or really broad."
No single offering will address the entire mortgage crisis, she said. "There are a lot of reasons we got here. There are going to be a lot of things that have to happen to get us to a different place. This is one of those things."
