Mods Require a More Holistic Approach
As servicers are pressured to do more loan modifications from the federal government, most mortgage technologists agree that they're going about handling the volume the wrong way. Many servicers are implementing niche default solutions and bolting them onto their core servicing platform, but technologists warn that doing a loan modification right requires a more holistic approach.
"We want to go in there in a quick-hit fashion, look at the operation and come back with recommendations," explained Grace Brasington, executive vice president, strategic consulting services at Lender Processing Services.
"We'll look at every aspect of what they're doing. How are they measuring risk? We'll shadow their customer reps to see how they're communicating. We'll look at their fulfillment technology. From there we make recommendations.
"Sometimes we find that they need analytics, sometimes it's more about better reporting. This only takes us a week or so. We are staffed with industry experts that do this. From there we report back to the executive team with suggestions. If we get agreement, we move forward with that plan."
Specifically, Jacksonville, Fla.-based LPS offers an entire suite of products to automate the workout process such as ClosingStream, an e-signature solution, OptiMod, which provides the best-fit loan modification recommendations, Mortgage Scores, which identifies loans most likely to default and the loss severity of those loans, and Proactive Risk Management, which is a risk management platform that delivers targeted loss mitigation recommendations at any point of borrower interaction. Wrapped around these solutions are consultants who provide enterprisewide recommendations for improved best practices and more efficient processes.
Citizens Financial Group has opted to use all the LPS solutions as part of one package with great success. "LPS has woven its strategic consulting practice into each step of the modification process and this, in conjunction with LPS' proven solutions included in RediMod, is what made LPS the right partner," said Brad Conner, vice chairman of consumer finance at CFG. "We have leveraged LPS' solutions for more than 20 years and are excited to further expand our relationship."
"From an implementation standpoint, CFG wanted to get lift quickly. If they could implement their e-signature usage earlier in the process, they could expedite the process. We're finding that leveraging the e-signature is a great benefit to the servicer. CFG also wanted us to work with them around analytics. They've been up and running since October. From the point of discovery to bringing the technology tools together in this way took four months. Subsequent implementations won't take as long. If they like what we have out of the box that will shorten things, as well."
According to Denver-based vendor Mortgage Cadence, the time has come for loan servicers and lenders to remove manual/inefficient processes and embrace online technology that enables them to more efficiently meet the ever-increasing need for successful analysis and evaluation of loss mitigation efforts. To this end, the vendor has launched the Loss Mitigation Gateway to provide online initiation, management and execution of the loss mitigation process.
"In these tumultuous times, there is an enormous need within the servicing community for rapid and efficient loss mitigation solutions to assist in the modification of troubled mortgages," stated Trevor Gauthier, vice president of marketing at Mortgage Cadence in a prepared statement.
"Our Loss Mitigation Gateway fulfills this need by quickly analyzing loans against the required HAMP guidelines and/or other proprietary products (i.e., straight capitalization, principal forbearance, rate relief, rate relief with extended term) and generating/distributing loan modification packages for qualified loans."
The Loss Mitigation Gateway provides users with real-time pipeline viewing and a variety of defined workflow paths based on the functional group of the associated user. Upon loan entry/import, the system validates that the required data is present/reasonable and executes the appropriate calculations (including NPV and DTI).
When run, the waterfall calculation determines if the loans qualifies for a modification (HAMP or proprietary) and what the new loan terms will be for that modification. The results are displayed for review/approval. Additional quality assurance/underwriting information can be collected as needed.
Upon completion and validation of analytics, the Loss Mitigation Gateway generates loan modification document packages (including the standard HUD-approved HAMP modification package) while maintaining the appropriate status updates within the pipeline.
The Loss Mitigation Gateway allows the user to have the generated document packages securely distributed to the borrower. Clients may also elect to have the packages returned to a specific address or to a collection center.
Brasington said knowledge is power in today's servicing shop. "We found that if they know what's going on in their organization, that makes for a more successful process and modification. It's about process improvement."