Simple Ways to Comply Using Web-Based Tools
NEW YORK-Servicers challenged to perform better when processing loan modifications are finding that simplicity is king.
It is old news that the Internet is simplifying personal finance. What is still catching up with both borrowers and servicers is the reality of click-of-the-mouse loan modification tools that keep entering the public domain.
Despite process complications in filing a loan modification package that complies with all Home Affordable Modification Program requirements for instance, solutions can be as simple as a do-it-yourself DVD. Various examples indicate that homeowner outreach is more effective when using diversified Internet tools.
Since Financial Literacy Solutions, Coral Springs, Fla., initially introduced its solution in August 2009, it has been accessed over 125,000 times, the company said.
Consumers learn in different ways, says FLS president, Garth Graham, so combining video with other Web-based solutions is a best practice in engaging and teaching customers.
He quotes studies showing that up to 80% of people regularly watch online video, and also that 80% of adults think they would benefit from more financial education. So responding to these "pretty compelling" numbers, FLS took another step to expand its outreach by entering in a strategic partnership with IndiSoft, Columbia, Md., to provide online foreclosure prevention assistance.
Homeowners in need of a loan modification can access a series of educational videos through IndiSoft's RxOffice homeowner portal. Viewers learn how to work with nonprofit counseling agencies to complete a loan modification package that is in compliance with lender and servicer requirements. Paired with an automated system video has proven to be a good learning tool, says IndiSoft CEO, Sanjeev Dahiwadkar, because it makes the process of completing a loan modification package easy and quick.
And that matters in times when the number of those waiting in line to start a modification process is long and stalled.
The Treasury Department reported that currently several million homeowners are estimated to be eligible for HAMP and more than one million have already received modification offers. And the so far low approval rate is often blamed on incomplete or noncompliant loan modification packages. Data also show that while approval numbers increased from 9% to 12% for the nearly 3 million requests loan servicers have received since the Obama housing rescue plan went into affect in March last year, that is not enough to outpace foreclosures.
No wonder the idea of a TurboTax product type for the loan modification world has indeed captured the imagination of many.It helps overcome servicer capacity shortages by getting customers - the party that is suffering the most from the crisis-more involved in the loan modification process.
According to Amir Fathi of loanmoddvd.com, the reason why lenders are so slow in processing loan modifications even though Treasury has given them incentives such as the $1,000 for each loan modification performed and the option to report the loan as current and not have to show the loss on their balance sheet is simple: They are not receiving complete enough packages from their borrowers.
Mr. Fathi and his colleagues, including credit expert John Ulzheimer, say that aforementioned data prove that although borrowers can do their loan modifications request themselves, filling out a two-page form from the lender's website just is not going to work.
"In order for these numbers to dramatically improve before the roof caves in, borrowers must have proper assistance and guidance in achieving a mutually beneficial loan modification for themselves as well as their lender."
The solution they offer is the loanmoddvd.com do-it-yourself loan modification kit that includes software, forms, step-by-step instructions and 24/7 customer support.
"I often tell people, 'Sure you can do your taxes yourself, but if you don't use a tax preparation software such as Turbotax, it will take you twice as long, you will not have the latest possible tax deduction codes and you're much more likely to make costly mistakes,'" Mr. Fathi says.
Obviously he and his colleagues believe they provide just that.
Another product that is gaining tract in the marketplace is the eTurboMod option introduced shortly before yearend 2009 by We Save Homes Inc., Laguna Niguel, Calif.
It walks users through the entire loan modification process "virtually eliminating the need to pay a third-party expert thousands of dollars," the company said, since software users can do it themselves the same way they file their own taxes through automated tax programs, "easily, inexpensively and electronically." The tool has already started to become popular among some industry insiders who see it as a tool with long-term potential.
In February, e-TurboMod creators entered into a strategic partnership that will make it available to a larger number of distressed borrowers taking off as its creators had initially hoped. We Save Homes Inc., is a foundation created by a group of real estate, mortgage, financial and legal professionals to educate and assist homeowners, through loan modification, loss mitigation and short sale software. Upon the announcement of the partnership, We Save Homes Inc. chairman Andrew Kardish stated that the contract with Mitigation Professionals, LLC is just the start. "During 2010 we expect continued industry wide adaptation to our eTurboMod software."
The decision, according to Mitigation Professionals president, Glen Reneau, was made based on "extensive research" that convinced company executives it is "the best in class."
We Save Homes Inc. executives said the company is promoting uniformity in industry wide processes, and the evaluating and restructuring of the mortgage notes, so it has been "actively involved with federal and state lawmakers and the banking industry" to effectively construct a consistent process and equal policy through an automated software technology platform that would facilitate absolute precision and management.
The Homeowner Toolbox online portal also was introduced last year. Andy Firoved, CEO of the loan modification services provider, said in an earlier interview that its pre-approval engine would do the legwork for the lender and servicer who is doing modifications like some kind of virtual loan officer, and can be free for the borrower. Few would argue with that.