Market Turns Away From Mods, Shifts to Doing 'E’ Short Sales
Attendees at the recent Mortgage Bankers Association’s National Servicing Conference in San Diego expressed interest in how short sales can be more automated and technology vendors were ready to deliver solutions.
For example, AssetPlanUSA, a provider of foreclosure alternative solutions, and DepotPoint, a provider of default management workflow solutions, have joined to work with servicers and lenders to help the mounting number of troubled borrowers facing foreclosure understand the benefits of opting for a short sale and help them successfully pursue one. AssetPlanUSA will use DepotPoint’s technology to help its clients and their borrowers effectively achieve short sales.
Starting on April 5, the U.S. government will begin providing incentives to servicers who help borrowers facing foreclosure exit their homes gracefully outside the foreclosure process, thereby lessening the negative impact on the borrower’s credit score compared to a foreclosure.
The Home Affordable Foreclosure Alternatives Program provides relocation assistance for borrowers choosing foreclosure alternatives, allows borrowers to receive preapproved short sale terms before listing their property, and pays servicers cash incentives to cover administration and processing costs. However, many if not most financial institutions are not adequately set up to approve short sales in a timely fashion, leading to a very low success rate for short sales to date.
“Our nation is in the midst of a distressed property crisis affecting millions of Americans, and we must act swiftly and creatively to either help keep people in their homes or support a homeownership exit outside the foreclosure process,” said Joe Filoseta, president and CEO of DepotPoint.
“It will take integrated teamwork and relationships like the one we have forged with AssetPlanUSA to have a real impact on this crisis. AssetPlanUSA’s management team has extraordinary experience with short sales and working with troubled borrowers to find alternatives to foreclosure. We look forward to working together.”
AssetPlanUSA is led by president and CEO Rayman Mathoda, a former executive vice president with IndyMac Bank, as well as managing director Ron Garber, a former agent for Re/Max. DepotPoint provides default management technology for the distressed property market. The company’s TrackPoint Platform incorporates a Web-based workflow engine and tracking system for managing default transactions, including short sales.
Securing documents has been cited as one of the biggest hindrances — if not the biggest hindrance — to converting the nation’s 1.2 million trial HAMP modifications into permanent modification status. Currently, only approximately 66,000 HAMP modifications have been transitioned from trial to permanent status.
“One of the big difficulties with the HAMP program is that servicers are waiting 90 days to six months or even longer to get borrowers’ required documents,” says Arvin Wijay, chief executive officer for Retreat Capital Management Group.
“We’re working to hard to try to establish a new industry standard for turnaround times and service levels in picking up and notarizing borrower documents. We want to expedite the process.”