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Educating the Mortgage Industry on Using Federal Programs

Efforts to help as many troubled borrowers as possible to benefit from the various federal assistance options such as the Home Affordable Modification program are pressuring the mortgage industry to educate itself and its clients about program guidelines and requirements.

One of the first comprehensive solutions designed to empower borrowers and lenders to gain control of the process is a foreclosure prevention and management tool launched by Fair Isaac Corp., Minneapolis, based on consumer credit behavior feedback. The FICO Mortgage Recovery Initiative is also based on Making Home Affordable guidelines assisting both homeowners and lenders deal with foreclosures.

MRI was developed to help facilitate mortgage modifications and mitigate new delinquencies by reducing redefaults and preventing foreclosures. Fair Isaac said the tool is timely since it assists borrowers and lenders to be aware of and comply with the federal Making Home Affordable guidelines.MRI users can contact program partners who work with FICO, such as the Homeownership Preservation Foundation a national network of HUD-certified counseling agencies, Money Management International, a full-service credit counseling agency, and Equifax.

The initiative addresses the U.S. mortgage loan crisis by combining the capabilities of FICO - which offers analytics and technology that helps users reduce fraud losses, manage credit risk and meet regulatory requirements - and counselors affiliated with national nonprofit partners like HFP. Colleen Hernandez, its president and executive director, says HPF continues to expand and operate the Homeowner's HOPE Hotline also thanks to "innovative solutions like FICO MRI, which results from our shared interest in helping consumers, and from partnerships among policy makers and the mortgage lending industry, are the most effective ways to preserve and expand homeownership."

The goal, FICO said, is to address mortgage modifications while mitigating new delinquencies since according to Treasury Department estimates four million U.S. homeowners are at risk of foreclosure today and another seven million are seriously delinquent on their mortgage payments. Treasury data also state that the government's Making Home Affordable program could help 7 million to 9 million homeowners, or roughly 17% of the nation's estimated 52 million residential mortgage holders.

Upon the launch of the program Mark Greene, CEO of FICO argued that homeowners need easy, efficient and fast ways to weigh and process their loan modification options, while lenders and servicers need ways to reduce the number of redefaults and prevent future foreclosures. "Now that the U.S. government has established guidelines for mortgage remediation, we're able to provide comprehensive solutions that address everyone's concerns, leveraging the broad expertise of our partners and FICO's deep understanding of consumers' financial health and credit worthiness."

MRI serves consumers, lenders and servicers. For consumers, the company said, MRI speeds and clarifies the process of mortgage loan remediation. Lenders and services benef from preventive analytics to avoid loan delinquency and protect portfolio values, FICO risk scores based on consumer behavior and credit management data, an online consumer portal so lenders and servicers can contact customers, three sets of analytics that allow the identification of borrowers most in need of help before they default. For example, identify the best ways to connect with borrowers and ensure they receive appropriate loan offers. Plus, consumers are not charged for services. and can use mortgagereliefonline.com for information.

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