Loss Mitigation

Safeguard Properties has partnered with the American Association of Code Enforcement (AACE) to offer a training and certification program free of charge to code enforcement officials. Available nationally, the program is conducted via an online, on-demand Webinar platform, the first offered by a mortgage field services company. It provides an overview of best practices pertaining to property preservation and tools to assist code officials with day-to-day responsibilities of maintaining the integrity of properties in their communities.

A new law requires that Arkansas homeowners receive critical documents prior to a foreclosure and encourages loss mitigation or loan modification efforts before the foreclosure is initiated. Mortgage servicers must now provide borrowers facing foreclosure with copies of the note, mortgage, and any assignments; the physical location of the note; and payment history. Homeowners must also receive information about assistance programs that are available.

Federal regulators split from state attorneys general last week to cut their own deal with mortgage servicers as part of a settlement for the robo-signing mess that surfaced last fall. Critics of the side deal are calling for federal regulators to withdraw their agreements and work with the states to hold banks accountable. But even in the attorney general camp there has been dissension. A study released Tuesday by three economists says the original settlement proposal backed by state counsels could increase the foreclosure inventory by $297 billion.

The climb towards an expected 10 percent delinquency rate for loans held in commercial mortgage-backed securities (CMBS) has slowed, according to the latest index results from Fitch Ratings. The agency reports that late-pays retreated two basis points to end March at 8.74 percent, with delinquencies falling for four of the five major property types. At the same time, Trepp says loss severity is the lowest it's been since the company began reporting, with the majority of loans liquidated in March having losses of less than 2 percent.

The National Association of Mortgage Field Services (NAMFS) and Lender Processing Services (LPS) have teamed up to develop a new online tool that the organizations say will facilitate communication and collaboration between code enforcement officials and national providers of field services to the mortgage servicing industry. The Web-based tool is called ALLIANCE. It will be launched May 1, and is free to both local code enforcement officials and participating national providers.

The Illinois Supreme Court announced on Monday the formation of a special committee to study and formulate proposals to help families facing foreclosure. The committee will also work to improve the judicial process in mortgage foreclosures throughout the state. Supreme Court justices noted that Illinois' foreclosure crisis is not easing. At the end of 2010, there were approximately 70,000 mortgage foreclosure actions pending in Cook County alone.

RxOffice, a default management technology platform from IndiSoft, was recently enhanced to meet the updated Home Affordable Foreclosure Alternatives (HAFA) eligibility rules and forms, such as the Dodd-Frank affidavit. Specifically, the RxOffice short sale module supports the capture of data needed to execute either a HAFA or traditional short sale.

Recent improvements in the job market are translating into falling subprime delinquency rates. At the same time, prices on subprime credit-default swaps (CDS) have risen for five straight months. Multiple reports on the secondary market signal growing investor appetite for subprime mortgage bonds and finance instruments like CDS, which transfer the risk of default from the bond holder to the seller of the swap. According to Fitch, subprime delinquencies are dropping sharply with cured loans up by as much as 50 percent for some vintages.

The Federal Housing Administration's Mortgagee Review Board has settled with Massachusetts mortgage lender First American Mortgage Trust (FAMT) for failing to verify whether borrowers could sustain mortgage payments prior to refinancing loans. FAMT agreed to pay $72,500, reimburse FHA for past insurance claims, and indemnify FHA's insurance fund for any claims to be paid on certain mortgages should they default within the next 60 months.

Four fair housing organizations have released their findings of a year-long undercover investigation of 80 loan modification companies, which reveal a host of corrupt practices scammers employ to target homeowners in distress. According to the report, 55 percent of loan modification companies required an upfront fee to start work or a low initial fee to conduct minimal work, such as reviewing loan documents. Twenty-four percent advised or encouraged homeowners to stop making mortgage payments or stop contacting their lenders.