IMS Expands Loss Mitigation Offering Through Collaboration

Some mortgage servicers are counting on third-party collaboration as a way to continuously update their loss mitigation operations prompting financial service providers to offer expanded, end-to-end specialty solutions.

Two Houston-based firms, Integrated Mortgage Solutions, a collateral protection firm offering integrated distressed asset management services, and REO Leasing Solutions LLC, have agreed to exchange their specific expertise when addressing loss mitigation and real estate-owned inventory challenges.

The No. 1 challenge being loan volume, given expectations that over five million households are behind on their mortgages and risk foreclosure, followed by the fact that more distressed loans may enter the pipeline due to high unemployment rates and properties currently in the so-called shadow inventory. In addition, argues Cheryl Lang, IMS president and CEO, ever-changing legislation necessitates uniting with an organization experienced in both residential mortgage lending and property management.

The loss mitigation market has changed dramatically in the past few years, says C. Alan Paylor, president of REO Leasing Solutions, who has witnessed the ups and downs of the mortgage industry for over 35 years. "Today's market is an epiphany of the loss mitigation in the old days and the way we used to do things as true mortgage bankers. Certainly there are more moratoriums than we have ever seen in our lifetimes."

That this strategy is receiving considerable attention from the industry was obvious during the recent Mortgage Bankers Association's National Mortgage Servicing Conference in San Diego, Paylor says. "Even Fannie Mae on their Power Point has rental strategies as a non HAMP option."

The industry is reviewing such options and how it affects mortgage banking and asset management companies like IMS. The collaboration with REO Leasing Solutions offers tools that allow IMS to address loss mitigation in ways that were available even five years ago, he said, through end-to-end specialty solutions and on the scale they demand.

Today's servicing shops are constantly changing. There is a new market push for more peer collaboration that helps servicers respond to a whole new set of working standards that are not normally built into servicing shop guidelines.

According to Paylor, "This type of collaboration is really taking off."

"Once the shadow inventory gets let loose, they say it's 3 million to 4 million, we are going to be inundated with all these properties, and...eventually servicers will have to turn to these alternatives," says Lang.

When the tenant protection law was signed by President Obama, she recalled, "We knew that servicers were ill prepared to be landlords, so it made sense for us to expand our set of services" by offering tenant management to servicer clients.

This alliance allows for much more flexibility in loss mitigation. "Keeping the property rentable may be much different than keeping it livable," Lang said, and knowing what the law requires makes the management much more easier.

REO Leasing Solutions' expertise, adds Lang, allows IMS to expand the loss mitigation and REO management solutions it offers on a third-party basis to mortgage servicers especially within landlord-tenant law-leases, tenant qualification, payment by credit card, tenant turnover, make ready, and habitability and maintenance requirements.

The new collaboration is also in line with the REO Leasing Solutions business model as a subsidiary of Reverse Mortgage Solutions Inc. that offers preforeclosure loss mitigation options and investment strategy in cooperation with real estate and property management partners and a national attorney network.