Loss Mit Experts Expand Role in Servicing
Kondaur Capital Corp., a buyer of loans with regulatory, underwriting and performance issues, has formed a special team of "Combat Loss Mitigators" to meet current challenging conditions in the mortgage marketplace.
In the "red zone" caused by today's recession-like economy and fueled by depreciating real estate prices with little expectation of a near-term resolution, these CLMs, as the company calls them, have been deployed to turn around problem loans and portfolios that contain "scratch-and-dent" loans.
With over 75 years of collective experience in all phases of mortgage banking among its top-tier executive leadership, Kondaur's most senior CLMs are well positioned to create the sophisticated solutions that are vital to the survival of both borrowers and lenders in the current market, the company said.
"These unprecedented times have created a need for the combination of excellent default management skills - including, without limitation, loan origination and real estate owned liquidation expertise - and experience that defines these Combat Loss Mitigators," explained Jon Daurio, chairman and chief executive officer of Kondaur. At present, he anticipates six million mortgage loans are headed for default.
Mr. Daurio notes that the CLM's complex role begins with the need to appreciate the scope and immediacy of the seller's liquidity needs. He also stresses that the CLMs bring communication experience to the table that helps them talk with troubled borrowers and face the difficult stay or sell decisions that must be made.
"The analogy that I've come up with is I believe it is hand manufacturing vs. assembly line manufacturing. I believe most servicers approach this kind of asset management with an assembly line attitude," Mr. Daurio told NMN. He stresses that the CLMs are not doing combat with the borrower, but rather are willing to get in the trenches and work with borrowers who face difficult times. Following a servicing procedural manual isn't typically the best approach to working with them, he said.
Although the seller may simply want to unload the loan, Kondaur finds that working with the borrower to make adjustments - and ultimately creating a situation in which slightly lower payments can continue to be made - actually increases the loan's value, Mr. Daurio said. CLMs undertake detailed and time-intensive due diligence, producing a determination of "whether borrowers have the ability and desire to pay and stay or should sell and go," Mr. Daurio said.
Upon completion, single or multiple loans are then purchased and typically the only requirement or obligation of the seller is to provide the title to the loan. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/