It’s hard to tell where you’re going to find a good loss mitigation idea.
At the SourceMedia Loss Mitigation Conference held in Dallas recently, a participant said the government’s HAMP modification plan was a good loss mit strategy.
She got a few puzzled stares for lauding the government’s plan, which has been derided for coming nowhere near the goal of several million mortgage rescues.
The woman’s point, though, was that HAMP has spurred so many proprietary loss modification programs, which have helped millions.
Another came from an editorial roundtable we held in conjunction with the conference.
Doorknockers were lauded as a good loss mit strategy. But then Jay Loeb, whose National Creditors Connection Inc. is known for its doorknockers, went one better. Instead of just sending people to try to counsel late borrowers, he said companies should be sending out people to collect the money owed.
This is an old and venerable strategy in the mortgage business. In the old consumer finance shops, originating officers were expected to go out and collect money if their loans were overdue.
Michael Morris, EVP of Zions Bank, suggested using the present value of cash flow streams as an important loss mit tool.
Another old idea that has been dusted off and supersized is the Cash for Keys program. Traditionally, lenders have paid overdue borrowers to move out of the house, feeling that this can forestall losses due to vandalism, for one example.
It used to be, though, that what was paid was a couple of thousand dollars, enough to give the owner enough money to move into an apartment.
Now, another roundtable participant said, Cash for Keys payments can exceed $20,000! (That may be enough to put a downpayment on a condo, never mind a rental unit.)
Obviously, with the scope of the overdue problem remaining huge, all loss mit strategies need to be considered. Loan mods, few and far between before the mortgage collapse, have amounted to millions between HAMP and the proprietary programs.
Short sales, another little-used technique years ago, zoomed last year. This year, we are hearing about deeds in lieu of foreclosure. Financial counseling can help overdue borrowers, as well as those on the originations side of the equation.
No matter which tools they use, all servicers have stuck an oar into the loss mit pool, by the evidence of the conference.
