Technology Can Help Build Modifications That Last
New guidance by Treasury says that now homeowners will have to show documentation regarding income ahead of trial modifications. Why is this needed to build a more successful modification? This revision will ensure upfront - before even the trial modification happens - that the borrower can eventually qualify for a permanent modification. At present, a lot of borrowers are being placed into trial modifications that can't qualify for a permanent mod, but because income verification is being done after the trial mod is set up, servicers don't have all the information needed to determine if a permanent modification is even possible.
Currently most loan servicers are manually attempting to evaluate which loans are candidates for HAMP. This is a very laborious process, riddled with inefficiencies and the potential for mistakes. Once a loan has manually been qualified under the HAMP guidelines, servicers generate a loan modification package, which is distributed to the borrower. Interested borrowers return the package with the required documents to the servicer for processing and underwriting.
Servicers need to embrace technology that enables them to more efficiently meet the ever-increasing need for successfully analyzing and evaluating loss mitigation efforts. To this end, Mortgage Cadence has launched what it calls the Loss Mitigation Gateway, which allows servicers to automatically analyze a bulk set of loans (or on a per-loan basis as needed) against the required HAMP guidelines and automatically generate and distribute loan modification packages for those that qualify.
Mortgage Cadence's Loss Mitigation Gateway allows the user to import a batch of loans to be analyzed against the current HAMP guidelines, run customized analytics to determine which document packages within a batch should be generated for the HAMP modification process, request a HAMP loan modification package be created and distributed to a secure location, request that a review for required loan mod data and documentation be performed by the loan mod underwriter, view a pipeline that displays current loan mods with current status and configure a marketing page within the Gateway with branding/logo options, marketing downloads and information about current service offerings.
Urban Settlement Services, the nation's largest loss mitigation and modification provider, turned to Mortgage Cadence when volumes became too difficult to handle without automation. Jim Smith, president of Urban Settlement Services, said, "As our volumes mounted, we came to the realization that in order to maintain our high level of service we needed to make some strategic changes to how we do business, and in particular find a technology solution that could further automate our processes while delivering validation tools, analytics and document preparation and delivery services."
Realizing the need for more automation to build lasting modifications, Mortgage Cadence isn't alone in trying to deliver a more all-in-one solution. Similarly, the Hope Now Alliance has launched IndiSoft's flagship product called RxOffice. Based on the RxOffice technology, the new Hope Now Web portal called LoanPort streamlines the process by leveraging HUD counseling agencies that provide free services to at-risk borrowers. Hope LoanPort assists these organizations in submitting all the required documentation and data elements needed to consider a borrower for HAMP to their mortgage servicer.
"This new Web portal will help homeowners get a faster answer, via their housing counselor, on whether or not they qualify for a HAMP loan," said Faith Schwartz, executive director, Hope Now. "The ability to help at-risk borrowers navigate more quickly through the HAMP modification process is a win-win for borrowers and the servicers. Using available, secured technology and standardized application forms will make a difference in the amount of time it takes for a consumer to get the answers they are seeking."
Housing counselors will be able to track the progress of a homeowner's application and provide them with regular status updates, which has been a source of frustration in some cases. Additionally, this one port of entry will help the industry and the government to better understand where the bottlenecks are and take steps to address them.
"Technology can tell us why the mod is not sticking," added Sanjeev Dahiwadkar, president and CEO at IndiSoft. "The DTI requirement in HAMP now is high, in my opinion. With a drop in home prices maybe that should be decreased. The servicer will be able to tell the government we tried to help this many borrowers, but this many couldn't get to a final mod because the DTI was too high using this technology. From there, the government can and should adjust the program. Our hope is to provide transparency."
Greg Hebner, president of MOS Group, also known as Mortgage Outreach Services, says, "Everyone is trying to figure out how we get these borrowers passed the finish line. There's an urgency that servicers haven't faced before." MOS has been facilitating various types of mortgage resolutions between troubled borrowers and their lenders or servicers for over 34 years. "Servicers are being asked for data on a level of granularity that they've never been asked for. They're being asked for certain detail and they're saying, 'Shoot, we do that in Excel.' You can't have 30 days to figure it out."
Mr. Hebner thinks the government is getting it right and new tweaks will help HAMP be more effective, provided servicers apply technology to their processes. "When the December HAMP numbers come out I think they'll be better. We've focused on the doc side of HAMP. Servicers can qualify borrowers, but they often lose the borrower in the trial period."