By properly re-aligning risk and operational strategies, banks can minimize the effects of the subprime crisis and recover more quickly.

Boston, MA, August 18, 2008 – A new report from Aite Group, LLC provides a detailed picture of how banks and lenders have arrived at their current predicament, and discusses steps they are taking to manage the current challenges many are facing with rising delinquencies and losses. The report gives insight into expected technology changes and investments, and considers the regulatory implications of the recent housing bill.

Since trouble in the subprime mortgage industry first became evident in June of 2007, there has been a growing concern over the delinquencies and losses being experienced in the lending industry. As problems progressed, it became evident that the ramifications of subprime mortgage lending have adversely impacted many sectors of the lending industry in some shape or form. Ultimately, there are steps banks can take to maximize the overall effectiveness of their default management operation, minimizing delinquencies and losses. These include aligning the three distinct and unique operational strategies that support the life cycle of a loan: origination strategy, servicing strategy and default management strategy.

"Due to loose lending practices and high levels of risk taken, many banks and specialty lenders were clearly not well prepared to deal with the most recent economic downturn," says Brad Neigel, senior analyst with Aite Group and author of this report. "However, by redefining and recommitting to their risk management strategy, aligning their originations strategy with their default management strategy, and ensuring a proper balance within their default management operations, lenders can greatly improve their lending operation and its ability to optimally manage rising delinquencies and losses."

This 35-page Impact Note contains 21 figures. Clients of Aite Group's Retail and Wholesale Banking services can download the report by clicking on the icon to the right.

Related Aite Group Research:

• Lending Practices Under Fire: A Regulatory Update
• Life After the Boom: A Comparison of the Leading Residential Mortgage Origination Technologies
• Commercial Mortgage Technologies: Automating a Non-Standardized Process

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Aite Group Sales
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