Wingspan Portfolio Advisors

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• Wingspan Portfolio Advisors
• Default Servicing Solutions

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Contents

• Executive Summary
• Market Context
• Competitive Advantage
• The Wingspan Difference
• Profiles of Management Team

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Executive Summary

• A new default servicing specialist focused on
  creating and maintaining long-term paying
  relationships with highly delinquent borrowers by
  rebuilding their financial strength through
  strategies tailored to each borrowers unique
  situation
• Battle-tested and proven senior management team
  with a successful track record building start-ups
  
• Unparalleled understanding of the servicing
  industry, servicer characteristics, best
  practices, and performance drivers
• A unique strategic alliance with DRI Default
  Management, the industry-leading default
  technology provider, enables unsurpassed
  technological solutions
• A founding partner of the Coalition for Mortgage
  Industry Solutions
• Performance focused and analytics driven

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Contents

• Executive Summary
• Market Context
• Competitive Advantage
• The Wingspan Difference
• Profiles of Management Team

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Servicers Need a Wingman
The wingman is absolutely indispensable. It's
another set of eyes protecting you. That the
defensive part. Offensively, it gives you a lot
more firepower. -Lt. Col. Francis S. "Gabby"
Gabreski, USAF, 28 victories in WWII and 6.5 MiGs
over Korea.
Current state of the World
Expected state of the World

• Credit losses remain contained
• Existing staff and strategies maintain losses at
  an acceptable level

• Credit losses growing industry-wide
• Additional staff and new strategies are required

• Poor loan resolution performance no longer offset
  by home price appreciation
• Unprecedented volume of defaults
• More delinquent loans than servicers can work
• Some loan types requires unique strategies and
  skills
• Insufficient internal capacity to maximize the
  value of every loan type
• Servicers require specialists to supplement their
  core capacity

Wingspan complements servicer strengths
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Case Study
Second Mortgages Require Unique Strategies

• Second mortgage originations were at all-time
  highs.
• Now, nonperforming second mortgages are exploding
  in volume.
• Source, National Mortgage News.

• There are very few servicers with the skills and
  tools necessary to cure nonperforming second
  mortgages.

• The ultimate value of a nonperforming second
  mortgage does not principally depend on
  collateral value but on the borrowers psychology.

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Contents

• Executive Summary
• Market Context
• Competitive Advantage
• The Wingspan Difference
• Profiles of Management Team

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Experience

• Strategies guided by a deep understanding of best
  practices, servicing technology, and servicers
  operational practices
• Servicer practices are frequently not apparent to
  third parties but if known beforehand increase
  performance lift, for example
• Portfolios from servicers with collateral-focused
  late stage workout processes will benefit from
  Wingspans reperformance-focused workflow
• Portfolios from servicers with strict NPV-based
  workout approval criteria will benefit from
  Wingspans Behavioral Outcome Decisioning
• Portfolios from servicers that overlook second
  lien workout opportunities will benefit from
  Wingspans specialized recovery processes
• Experience working with many servicers highlights
  hidden areas of risk or opportunity

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Traditional Strategies Reduce Cost but Increase
Loss
Implications/Impact
Potential Shortcoming
Strategy
? Loss Frequency
80 of skips are still in their homes
Dialer-based calling
? Loss Frequency
Dont call delinquent borrowers
Scoring
? Loss Frequency
Reject viable opportunities
Strict workout qualification
? Loss Severity
Miss reperforming opportunities
Foreclosure outsourcing
Leave money on the table
? Loss Severity
Limited third party data
? Total Loss
Ignores borrower psychology
NPV-based decisioning
? Total Loss
Under-served borrowers
Under-incented staff
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Investor-Focused Strategies Reduce Net Loss
Advanced Special Servicer
Typical Special Servicer
?
?
?
Dialer-Driven Outbound Calls
?
?
?
Legal Network Management
?
?
?
Timeline-Based Event Tracking
?
?
Scoring-Based Contact Strategy
?
?
NPV-Based Workout Decisioning
?
Proactive Information Management
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Reperformance-Focused Workflow
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Fully-incentivized Workout Group
Behavioral Outcome Decisioning
?
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Contents

• Executive Summary
• Market Context
• Competitive Advantage
• The Wingspan Difference
• Profiles of Management Team

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The Wingspan Difference
Proactive Information Management
Focus on Reperformance

• Fully automated data gathering prior to
  borrower contact
• Advanced analytics consider the factors that
  affect each loan and determine servicing strategy

• Incentives targeted to maximize reperforming
  loans
• Logical consequences of noncooperation
  encourage continued payments

Fully Staffed/Fully Incentivized
Behavioral Outcome-Based Decisioning

• Loans with greatest opportunity concentrated
  with highest skill positions
• Aligned incentives ensure servicing intensity

• Psychological equity creates leverage
• Informed listening establishes trust
• Legal remedies initiated only to return
  borrower to negotiating table

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Maximum Results through Superior Information
Management
Wingspans loan resolution logic evaluates the
factors influencing each loan and identifies
those loan resolution strategies best suited for
a given borrowers situation
Factor Indicates Source
Current Credit Condition Borrowers Capacity Credit Report, BK Info
Credit at Origination Propensity to Pay Loan File
Payment Pattern Probability of Future Payment Placement Data
Current Market Conditions Collateral Risk Trend HPA Trend Data
Lien Position Collateral Impairment Property Report
Effective Equity Foreclosure Value AVM, BPO, Reviewed Value
Prior Servicer Strategies Remaining Workout Value Servicer Knowledge
Psychological Equity Borrowers Commitment Value, History, HPA Trend
When Wingspan initiates contact with the
borrower, we are prepared with an in-depth
understanding of the borrowers circumstances and
the recovery potential of the loan
Wingspans advanced analytics determine the
servicing strategy for each loan
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Focus on Reperformance
Like Traditional Servicing Only Backwards
Logical Consequences of Non-Cooperation

• Strong incentives to return to reperforming
• Focused on cure - not collateral

• Designed to motivate resumed negotiations
• Workout efforts continue throughout

Loan Resolution
Reperforming
Performing
After 3 Payments
lt 30 Days Delinquent
Bankruptcy
BK Reperforming
BK Performing
Borrower Non-Cooperation
Borrower Resumes Cooperation
Legal Strategies/Logical Consequences
Foreclosure
Suit on Note
BK Relief
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Properly Aligned Incentives Create Powerful Lift

• Wingspan is both fully staffed and fully
  productive
• Borrowers receive dedicated attention from
  specialists who are ready and eager to talk to
  them

• Wingspans reperformance-focused workflow
  concentrates servicing intensive assets with the
  highest skilled individuals
• Loan Resolution Specialists earn more than 50 of
  their incentive income from returning loans to a
  paying status
• Outbound call volume is moderated to ensure
  sufficient time is spent with each borrower
• The reperforming workflow transfers loans that
  resume monthly payments to reperforming
  specialists who maintain payments until
  contractually current
• Larger work queues
• Lower compensation potential
• Contractually current loans transfer to
  performing collections
• Sole focus is maintaining payments
• Still larger work queues

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Behavioral Outcome Decisioning

• Leaving room for flexibility in an inherently
  rules-based process
• Relying solely on Net Present Value based
  decisioning
• Overlooks how the borrowers feelings affect
  workout success
• Neglects to consider the probability a
  non-qualifying workout will succeed
• We also listen and learn
• Forms bond between the parties
• Establishes mutual respect
• Establishes our authority
• Command of the facts through superior information
  management
• Unambiguous willingness to help reinforced by
  incentive alignment
• We recognize that borrowers frequently respond to
  non-monetary considerations that we call
  psychological equity
• Borrowers always think the house is worth more
• Appreciate the social cost of losing the house
• Recognize the inability to replace right away
• Most borrowers do not wish to lose their home and
  will eventually reach out for help if someone is
  there

• Panic Points Using our legal rights, data, and
  psychology to overcome borrower denial, motivate
  borrower cooperation, and maximize recoveries in
  the shortest possible time.

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The Power of Informed Workflow

• DRI seamlessly integrates vendor and third party
  data into Wingspans proprietary workflow and
  decisioning processes
• Clients and vendors may access their relevant
  information and reporting in real time through
  DRIs .Net interface
• Wingspans workflow intelligently automates
  vendor referrals, performance instructions, and
  product ordering

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Active Servicer Management
Wingspan Also Creates Lift Through The Proactive
Oversight of Third Party Servicers

• Develop Action Plans
• Reporting and performance analysis identifies
  underperforming or high-risk loans or processes
• Work with the servicers to remediate
• Ensure adequate resources are available
• Frequent contact ensures follow-through
• Continuing Follow-up and Onsite Reviews
• Ensure servicing intensity and loan resolution
  strategies meet best practices and preferred
  strategies
• Validate data provided by the servicer
• Monitor servicing liquidations, advances,
  charge-offs
• Implement Changes and Best Practices
• Recommend outsourcing solutions where warranted
• Implement servicer performance incentives where
  advantageous

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Active Servicer Management

• Wingspan has the tools and the experience
  necessary to manage third party servicer
  performance and to identify areas where proactive
  intervention will improve performance
• The ability to create servicing lift drives
  improved investment returns, uncovers hidden
  opportunities, and sharpens future bids

Improved Performance
Acquire
Ensure Follow-Through
Price
Active Servicer Management
Pricing Analytics
Score Card
Select Portfolios
Develop Action Plans
ID Performance Exceptions
Analyze Performance
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Contents

• Executive Summary
• Market Context
• Competitive Advantage
• The Wingspan Difference
• Profiles of Management Team

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Steven Horne, President

• Recently completed the reorganization of Fannie
  Maes National Servicing Organization.
• Developed new servicer scorecard, risk-targeted
  strategies, and performance incentives.
• Formerly a partner with Sherman Financial Group
• Led the creation of 3 successful business lines
• Delinquent second mortgage purchasing and
  servicing
• Chapter 13 credit card purchasing and servicing
• Mexican unsecured consumer lending and servicing
• Developed innovative loan resolution strategies,
  systems solutions, and workflow.
• Earlier Positions
• MSV - developed start-up into a leading provider
  of outsourcing services for Freddie Mac.
• Ocwen Financial - Director of Default Servicing
  during Ocwens period of most rapid growth.
• RTC - Lead attorney for asset teams that
  recovered over 5 billion from portfolios of
  complex commercial loans, participations,
  securities, and real estate.
• Frank, Bernstein, Conaway Goldman
  Successfully defended high profile financial
  institutions in complex securities fraud and
  lender liability suits. Cases featured twice in
  Forbes.
• JD from George Washington and BAs in Economics
  and English from Emory.

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Catherine Castle, Analytics

• Currently an AVP with Option One responsible for
  developing and executing secondary market
  strategies for Option Ones mortgage assets
  including sub-prime, Alt-A, and scratch and dent
• Develop models to optimize secondary market
  execution
• Coordinate secondary market transactions with
  investment banks, GSEs, and other counterparties
• Previously, as Vice President of Business
  Analysis for Resurgent Capital Services, served
  as the principal architect of Resurgents
  automated placement and recall strategy used to
  manage the recovery strategy for approximately 14
  million unsecured consumer accounts.
  Instrumental in developing Resurgents
• Price modeling,
• Collateral valuation modeling,and
• Business process reengineering
• Earlier positions
• VP for Market Research and Analysis with
  Homegold, Inc.
• AVP for Fleet Mortgage Group focused on portfolio
  valuation and hedging strategies
• M.S. in Applied Mathematics from the University
  of South Carolina
• Motorola-certified six sigma black belt.

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Suzanne Singer, Business Development

• Most recently, Ms. Singer was a Director in the
  Institutional Client segment at GMAC-RFC, working
  with large subprime mortgage companies, banks,
  and mortgage bankers.
• Before rejoining GMAC-RFC, Ms. Singer was the
  National Sales Executive for Option One Mortgage
  Corp., where she identified, developed, and
  managed all sub-servicing relationships.
• Ms. Singer began her career at GMAC-RFC in the
  Distressed Mortgage Services Group, where she
  sourced the acquisition of non-performing assets
  and REO through customized programs that met the
  clients needs and provided solutions to most
  effectively manage their balance sheets.
• Previously, Ms. Singer was a Manager in the
  Servicer Division at Freddie Mac where she
  developed, implemented, and managed Freddie Macs
  Helping Hand Outsource program where she managed
  key servicer relationships and established
  policies, procedures, and controls for the
  program. Prior to Freddie Mac, Ms. Singer was a
  senior consultant in the real estate services
  practice at Laventhol Horwath.
• Ms. Singer has a bachelor of arts in economics
  from The College of William Mary.

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Georgia Moses, Operations

• Twenty-five years of overall servicing experience
  including conforming and non-conforming loans
  management of investor and mortgage portfolio
  accounting origination and servicing quality
  control and strategic servicing initiatives
  (e.g. servicing system conversions and major
  portfolio transfers). Additional experience in
  the area of risk management and acquisitions due
  diligence focusing on default servicing
  functions. Previously worked with MacAndrews and
  Forbes Holdings Group and served as Senior
  Operations Manager of Millenium Mortgage.
• Most recently, Ms. Moses spent ten years with
  Fannie Mae as a Servicing Consultant and as
  Business Manager of the National Servicing
  Organization. In that capacity reviewed new
  servicers for Fannie Mae approval, worked with
  servicers to identify operational and process
  issues. Developed remediation plans and directed
  the implementation of required process
  improvements. Supported servicers training
  needs.
• Masters of Business Administration, Accounting
  University of Rochester, Rochester, NY
• Certified six sigma black belt

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For More Information

• Steven Horne, President
• Wingspan Portfolio Advisors, LLC
• 214-789-0943
• steve_at_wingspanadvisors.com