Best Practices Approaches to More Effective Loan Modification Operations
In today's challenging mortgage environment, success depends upon being as efficient as possible. Cost and time savings are dependent upon having systems in place that will streamline important functions. We examine three areas in which mortgage originators and servicers are saving time and money by adopting best practices approaches: loan modifications, electronic disclosures and improving the borrower experience.
Nobody wins when a house goes to foreclosure sale - the investor, borrower or the servicer. There's an increased focus and people are thinking of creative ways to keep people in their homes.
It's about building a scalable and repeatable process that can be tailored to the unique circumstances of each borrower, therein the real challenge for the servicer with the volumes they're dealing with.
Loan modification is a critical loss mitigation tool servicers use to help distressed borrowers. With approximately 1.8 million sub prime ARMs expected to reset to higher interest rates in 2008, servicers are expected to make extensive use of loan modifications in the days ahead.
The objective is to develop effective loan modification programs using best practice approaches. Below are some key elements to consider in developing a best practices approach to the loan modification documentation process:
1. Loan Modification Agreements—Why types of Agreements best fit your borrowers?
2. Package content—What should your loan modification package include?
3. State, federal regulations and investor requirements—Is your package compliant with all three?
4. Rapid Implementation—How quickly can you implement a comprehensive and flexible program?
5. Adapting to change—How quickly will you be able to implement any pending regulatory or investor requirements?
6. Recordation—Does the loan modification need to be recorded? If so, is your package in compliance with the recording entity requirements?
7. MERS Compatibility—Does your program support the Mortgage Electronic Registration System?
8. Secure deliverability—Are you able to securely send and receive packages electronically? Can you support eConsent and eSign?
9. Workflow—How will you implement this program? Are your systems ready to support it?
Specific business and workflow needs:
* Standardized loan modification agreements that can be quickly customized
* Flexible document packages—from individual documents to complete document packages
* Rapid Implementation utilizing “Industry Best Practices” approaches
* Compliance expertise to help ensure federal, state, and investor compliance
* Flexible secure delivery options, including eSign so you can rapidly obtain borrower acceptance
Employing these elements will not only help you develop a sound, disciplined loan modification practice for your organization, it will help your clients avoid foreclosure and keep their home. Which in theory, should win you a customer for life.
