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Communication Plays a Key Role in Reducing Foreclosures

Servicers believe that developing greater communication during the default resolution process is an integral aspect in order to reduce the number of foreclosures nationwide.

According to RealtyTrac, over one million homeowners received a foreclosure filing—default notice, auction sale notice or bank repossession—since 2011 began.

“Good things don't come to those who wait. The sooner you can get to the borrower in the delinquency, the higher the probability of success is going to be,” said Michael Hernandez, vice president for default prevention outreach at Fannie Mae. “It is important to start the process as quickly as possible by identifying the delinquencies and recognizing workout opportunities that are available to reduce delays before proceeding to a foreclosure. Everybody has to think that every day that goes by is not helping the situation.”

Ty Miller, vice president of servicer relationships and performance management at Freddie Mac, agrees that early communication is key in helping a distressed borrower during the foreclosure prevention process. “The longer we fall off, such as 90-day delinquencies, the closer we are to the cliff,” Miller said. “We have to reach the borrowers quickly and efficiently and communicate in a clear format.”

One way to establish an effective mode of communication during the foreclosure process is to create a single point of contact between the servicer-lender and borrower.

Software-as-a-service provider eMason recently implemented a new feature to its Clarifire application called the community portal that provides GSEs and servicers technology that utilizes a single point of contact. The software enables servicers to deliver modifications, reduce cycle times and improve communication with its borrowers by participating in the automated workflow, the workout qualification and decisioning for borrower inquiries. They also have access to robust reporting and auditable processes that meet the requirements of the borrower delinquency management model.

The portal provides borrowers with a platform to communicate, receive notifications, upload required financial documents and review real-time status of their workout.

“A major key to any successful relationship is communication, especially between the servicer, consumer and Realtor around the default servicing,” said Reginald Givens, neighborhood stabilization program coordinator for the Arizona Department of Housing. “Whether or not it is a Web-based system, there needs to be processes and procedures that allows for complete communication of options, solutions and individuals in order to effectively move through that process.”

According to Sue Allon, CEO and founder of Allonhill, a Denver-based mortgage lending and credit risk management firm, there is a high volume of foreclosures across the country because there is not a single set of foreclosure rules. She believes it would be beneficial for the American borrower if the state attorneys general created the same regulations in which all servicers nationwide would have to comply to.

“Anything that removes uncertainty in this industry is a plus,” Allon told Mortgage Servicing News. “Uncertainty is never a good thing with investors when trading security, so any action that says we are going to establish rules now going forward is good for the industry. This will give investors confidence because they will know what the rules would be, which is a very favorable thing.”