VA Revamping Servicing Ops
The Department of Veteran Affairs is revamping its mortgage servicing operations and it has awarded a five-year $10.8 million contract for an automated loan servicing information system.
This new technology will make it easier to monitor servicers and the performance of VA loans, according to Keith Pedigo, director of VA's loan guaranty program.
"It is really an amazing leap forward for us in terms of our capability," he said.
Over the next 12 months VA plans to issue final regulations that delegate more responsibilities to VA loan servicers, especially in the area of loss mitigation.
At the same time, VA has contracted with Creative Computer Solutions Inc., Bethesda, Md., to provide a new system that will automate the flow of servicing data on VA loans.
The contract calls for Fidelity National Financial, Jacksonville, Fla., to provide the servicing system, which is customized to meet VA's specifications.
Six of the top 10 mortgage servicers use Fidelity systems, which were developed by Alltel. Fidelity acquired Alltel in early 2003.
"If our timing is good, this system will be ready to go when we get the final go-ahead for the regulations," Mr. Pedigo said in an interview.
Currently, VA employees assist veterans and military personnel when they get behind on their monthly mortgage payments.
Under the new servicing regulations, the servicers will be responsible for loss mitigation and VA employees will oversee the servicers to ensure they are providing the proper level of assistance to veterans. "They will become the overseers and enforcers," the VA director said.
When necessary, VA employees will intervene and contact veterans directly to provide assistance.
VA also intends to emulate Fannie Mae and Freddie Mac by providing dollar incentives to servicers for their loss mitigation efforts. "We will be developing tier ratings like Freddie Mac based on performance," Mr. Pedigo said.
There are $245 billion in VA-guaranteed single-family loans outstanding. VA guaranteed 490,000 single-family loans in fiscal year 2003 totaling $66 billion. Refinancings comprised 67% of the loan volume.
FY 2003 is the third-best year in terms of number of loans guaranteed since Congress created the VA home loan benefit program in 1944. The VA program celebrated its 60th anniversary on June 22.
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