Burned mortgage investors seek "high-touch" healers

Mortgage investors, watching homeowners default on their loans in record numbers, are fighting back to limit the losses on their assets.

What they are finding is companies overwhelmed by the volume of loans that need special attention due to delinquencies that show little signs of slowing.

After a year of crisis, servicers are increasing the number of "high-touch" loss mitigation staffers who can underwrite new loans for financially stretched customers and haggle with buyers of homes in foreclosure. But investors say they are still finding deficiencies due to backups of onerous work, skyrocketing costs and a lack of incentive.

"Some servicers were not even picking up the phone saying 'are you going to pay this month?'," said Sadie Gurley, a managing director at Marathon Asset Management in New York.

Disillusioned, investors are looking for help or simply taking their business elsewhere.

As a result, a breed of mortgage servicer that was out of the limelight during the housing boom is becoming more prominent. Known as "special servicers," the companies are geared toward taking bad loans and making them current, rather than the basic servicing business of collecting and distributing payments.