[quote=Krista]#1 and #5 should absolutely be a reason to provide loss mitigation assistance- especially if the borrower is willing to pay and did not create the default due to financial mismanagement or disregard for the obligation.
Non-performing loan portfolio managers should consider whether curing the default via a change in terms makes more financial sense than foreclosing or completing a short sale. Since in the instance of #1, the borrower is reemployed and willing to pay to the best of their ability, the default might be able to be cured via a change in terms. Now lets just say that the investor purchased the portfolio at a discount, and if the loan was brought current through a modification, the borrower might be able to refinance under the short refinance program and payoff the note holder. Even if the note holder had to provide 10% debt forgiveness, the proceeds from the refinance would be quite a coup if the note was purchased for 50-60 cents on the dollar. A borrower that is in default can be refinanced into the FHA short refinance in as little as 6 months. If the modification is non-HAMP, they only need to make 3 payments.
As to #5, the borrower would not have created the hardship, and the lower income would not be the borrowers fault. Same scenario as above.
Now if it does not make sense to cure the default via loss mitigation (such as when the borrower’s capacity and affordability cannot be bridged), and short sale/foreclosure would make the most sense, then the servicer should protect the interests of the investor.[/quote]
I’m coming from the servicing side. Even though the company line is that each case is looked that, it’s really not. Servicers like CW pay numerous 3rd parties to run their portfolio against the industry and that is how it’s determined who gets help and who doesn’t.
Unemployment/loss of income triggered a reading of a script over the phone and heads up to the foreclosure dept. Only way they were going to get help is if they knew a supervisor.
One interesting tidbit i learned while there was that Ohio was #1 in foreclosures like 15 straight years. You’d wonder why we’d do business there, and that’s where I was given the talk about how the mortgage industry is very political and that they could not just stop doing business with a single state without repercussions.
