Loan Modification Pre-Approval Seen Giving Customers an Edge

Pre-approval for a loan modification gives customers a much better chance of successfully going through the trial process and approval for a mod, Ken Scheller senior vice president, home retention division, Bank of America, said during a panel at SourceMedia's Best Practices in Loss Mitigation Conference in Dallas. He echoed remarks made by other executives who stressed the importance of "loan analytics" and risk evaluation at the front-end of a loan modification. The process is affected by very low customer outreach rates, which often are as low as 1%. This may be because lenders and servicers can be intimidating to borrowers. The executive said that among the biggest problems faced by lenders and servicers in today's market are that customers may be afraid to communicate with their lenders and may lack knowledge about their options. Sometimes borrowers prefer to communicate with their attorney instead of a servicer or counselor, because they value the one-on-one experience and the privacy it entails, he said. Mr. Scheller also noted that when a foreclosure is in the works there is a "sweet spot" in the first 60 days of processing before actual foreclosure when borrowers have a last chance to consider retention, and this window can be better utilized to the benefit of the borrower when an attorney is involved.