The surge.

Servicers are not getting the credit they deserve for continuing to fight the good fight against a groundswell of foreclosures that so far is nowhere near tamed. Month after month, foreclosure starts have been growing--even though servicers have been throwing every loss-mitigation tool they possess at the problem. But servicers may have finally found and trained enough personnel to begin making a difference.

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In a story this month titled "Between a Rock and a Hard Place," we learn that Wells Fargo Home Mortgage Corporation, Des Moines, lowa, has grown its servicing staff by 60 percent in the two years ending March 2008. In the article by Neil Morse, Mary Coffin, a 10-year Wells servicing executive and executive vice president of loan servicing, reports her company's collections staff has increased by 63 percent while the number of loss-mitigation workers has increased by 150 percent over just a two-year period. Wells has a servicing portfolio of more than 10 million loans--and roughly 92 percent are classified as prime.

If those are the staffing increases required to manage a prime portfolio, imagine the kind of manpower needed to keep a subprime portfolio from imploding. The numbers are a bit overwhelming.

In another article this month titled "More Than One Crisis," we find some more sobering statistics. In the article by Jerry DeMuth, a Federal Reserve Board economist (Shane Sherlund) is quoted making this prediction about hybrid 2/28 loans: "30 percent of the 2005 vintage 45 percent of the 2006 vintage and 40 percent of the 2007 vintage will default." In the same article, Mortgage Bankers Association Chairman Kieran Quinn notes that while subprime ARMs accounted for 7 percent of all outstanding loans nationally, they accounted for 42 percent of all foreclosures.

This same article points out that from 2001 to 2006, the annual number of subprime originations more than quadrupled and the average loan size doubled, according to research done by Yuliya Demyanyk, an economist at the Federal Reserve Bank of St. Louis. These numbers were all presented at a special conference sponsored by the Federal Reserve Bank of Chicago called "Credit Market Turmoil: Causes, Consequences and Cures."

Unfortunately, these problems (now left to mortgage servicers to clean up) are much more than an academic exercise. Real people are battling the difficult problems behind each and every loan headed for default. While we are still in the thick of the fight, our hats are off to servicers that are seeking to bring some measure of stability back to the housing market. Manpower matters, and hopefully bulked-up servicing divisions will start to turn the tide.

Janet Reilley Hewitt

Editor in Chief