Consumers In The Loss Mitigation Driver’s Seat

17318_becca_nottberg Consumers In The Loss Mitigation Driver's Seat BLOG VIEW: Data released by HOPE NOW indicates that, in July, there were more than four non-foreclosure mortgage solutions for every foreclosure sale. The data also shows that non-foreclosure solutions totaled approximately 122,000, which includes short sales, deeds-in-lieu and other workout plans.

This information tells us a few things. First and foremost, the impact of the housing crisis on consumers certainly is not close to being over. Second, lenders are working diligently to provide much needed loss mitigation solutions and facilitate the best possible results for borrowers.

The ongoing need for loss mitigation solutions is being driven by consumers. Though lenders often initiate outreach with borrowers to discuss loans in default or missed payments, consumers are the ones in the driver's seat. It is ultimately their desired next steps that control the direction of any plan lenders execute, and today, that is often a loss mitigation strategy.

Countless borrowers remain in the midst of difficult financial times. Though some lenders have been willing to offer progressive loans intended to assist, a large sector of the community still cannot qualify for these options, as they continue to owe more than their current homes are worth. Others are challenged by personal debt or are unable to save money due to exponentially growing rental rates, obstructing them from meeting minimum down payment requirements. A lender might reach out to the borrower first, but it is the consumer looking for a personal financial solution more often requesting a loss mitigation plan as a next step.

Although the Fed's decision to leave interest rates unchanged in September might have bought time for some borrowers, when rates do inevitably rise, many with adjustable-rate mortgages will find themselves in a difficult situation. Thus, many lenders are considering ways they can assist borrowers today but, also, how they can help a greater number in the future once this change occurs.

As more lenders work to bring their loss mitigation opportunities to the forefront and ensure their successful execution, they are finding it critical to streamline the management of these efforts. Many lenders continue to handle processes on spreadsheets and use outdated systems of record – neither of which is conducive to transparency, compliance or timely transactions. With objectives to shorten the time frame between a short sale's or deed-in-lieu's initiation and its completion, these methods have to change – both to achieve efficiencies, but more importantly, to more quickly support borrowers in achieving a resolution.

Some lenders are leveraging a dual-path approach, by which they manage processes for a short sale and deed-in-lieu simultaneously. This allows them to work both options and pursue whichever one is approved first. Should they receive approval first on a deed-in-lieu, the transition to real estate owned (REO) can be much smoother; lenders that have strong systems of record have an established transaction on record, immediate access to notes, title information and valuations. These elements are critical to expediting the REO processes and reducing overall time frames.

As a large portion of the American public continues to struggle with debt and credit issues, the ability to either fulfill a mortgage or purchase a home is significantly hindered. A considerable amount of weight is now on lenders' shoulders to prevent another downturn and to assist those currently in need of a solution. Though we see consumers driving the demand for loss mitigation strategies by inquiring about these solutions, lenders know the ball is in their court and are doing all they can to ensure these transactions are expedient, successful and lead to the best possible outcome for those they serve.

Becca Nottberg is an account executive with USRES/RES.NET, which provides an array of financial support services for valuating and liquidating real estate assets, such as broker price opinions, appraisals, rental surveys, value reconciliations and data-driven valuations. USRES also provides extensive liquidation services, such as REO disposition, as well as supporting services, including homeowners association management, eviction management and property tax coordination. RES.NET is the technology arm of the company.


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