The American Securitization Forum (ASF) has issued operational guidelines to assist mortgage loan servicers and counseling organizations in implementing procedures for reimbursing expenses associated with the provision of borrower counseling services. The guidelines follow the ASF's October 2007 guidance that borrower counseling fees may be reimbursable from securitization cashflows in situations where the servicer concludes that the counseling service has or is likely to mitigate losses and maximize recovery on particular loans that are in default or where default is reasonably foreseeable.
‘Servicers are legally obligated to mitigate losses and maximize recoveries on each mortgage loan, acting in the best interests of the investors in a securitization trust comprising these loans,’ says Tom Deutsch, deputy executive director of the ASF. ‘Borrower credit counseling is one of several tools servicers can use to preserve homeownership and prevent foreclosure, which is the best solution for borrowers and investors alike.’
The guidance is intended principally for securitized residential mortgage loans and recommends that servicers may reimburse up to $150 out of securitization trust proceeds for any approved counseling session, ASF says. Other specific recommendations given to servicers under the guidance include contracting with quality and trusted counseling organizations that will help borrowers connect with servicers, collect information relevant to loss mitigation evaluations, recommend appropriate loss mitigation alternatives to servicers and/or assist borrowers in restructuring the full range of their debt obligations to help them better meet their mortgage obligations.
Source: American Securitization Forum
