Regulation Continues To Shape Borrower, Lender Demand

Compliance remains a burgeoning distress for mortgage lenders as they face new 2010 regulations and guidelines both at the federal and state level. That concern is shaping and reshaping existing tools and services.

At the federal level, Hope Now is preparing to use a new outreach model during 30 Hope Now homeownership preservation workshops planned for this year.

Hope Now executives said servicers can use Hope LoanPort to process loan applications on site. The goal is to engage more homeowners to take action to avoid foreclosure and help those in a trial HAMP modification to speed up the delivery of documents needed to convert to a permanent modification.

The service is expected to assist thousands of borrowers. In 2009 Hope Now outreach events held in partnership with Treasury, HUD-approved housing counselors, government-sponsored enterprises and other partners helped over 31,000 at-risk homeowners.

Hope Now started offering the new borrower counseling approach option in partnership with six servicers and counselors that have a physical presence in nine key markets across the country in December 2009. It is now updated with the newly mandated HAMP requirements to allow HUD-certified housing counselors help homeowners collect required HAMP documentation, send a completed package directly to the servicer and track the application status.

Borrowers are encouraged to take advantage of these free counseling assistance options that benefit both homeowners and their lender servicers. Meanwhile, as lender demand for efficient loan modification tools keeps growing, homeowners are generating demand for affordable legal services.

According to Harland Stonecipher, founder and CEO of Pre-Paid Legal Services Inc., Ada, Okla., a network of independent law firms across the U.S. and Canada, the crisis enhances the need for preventative legal services that people can afford and rely upon, beyond federal and state foreclosure assistance programs that are still gaining traction.

The firm has created legal service plans that vary by state and province in pricing and benefits based on feedback from a select group of attorneys from the 38 independent law firms that provide legal services to Pre-Paid Legal Services' customers.

Attorneys from Arizona, California and Florida, three of the states hardest hit by the foreclosure crisis, offer practical tips and solutions for distressed homeowners. Judy Kim, an associate with Parker Stanbury LLP of Los Angeles, suggests developing a step-by-step plan for moving forward and avoiding foreclosure based on current circumstances. "Putting a personal face" on the process by submitting handwritten hardship letters to mortgage lenders, is key, she says.

Davis Miles PLLC of Mesa, Ariz., has developed a special loan modification program, which is communicated through free local market seminars targeting the most distressed communities. It is available on the firm's website and a weekly radio program. An attorney specializing in short-sale transactions was added to the staff to better assist homeowners who require information and negotiating assistance with that process.

"The foreclosure crisis has created a cottage industry of real estate and foreclosure workout scams," says Harley S. Herman, senior associate with deBeaubien, Knight, Simmons, Mantzaris & Neal LLP of Orlando, Fla., so to avoid these situations homeowners need timely, professional legal counsel and well thought legal service plans.