Loss Mitigation

SMART Servicing, LLC, an affiliate of Steel Mountain Capital Management, recently announced the availability of its new privately owned software, ""SMART""--Servicing Management Asset Recovery & Tracking. The system provides residential mortgage professionals with relevant loan-level information to control loss severity, as well as asset-level transparency outside the traditional servicing system formats, the company says.

Mortgage fraud has become more prevalent over the past couple of years as perpetrators look to capitalize on deteriorated market conditions. But a new study released by Interthinx this week indicates that mortgages are now less likely to involve fraud than they were during the first part of this year. The company says its national mortgage fraud risk index declined 3 percent during the second quarter, but Interthinx warns that areas already feeling the effects of past fraudulent transactions are finding mortgage fraud hard to eradicate.

Clayton Holdings has announced the hiring of Scott H. Kramer, a 24-year veteran of the real estate industry, as director of commercial default servicing. Clayton Holdings provides customized risk analysis, loss mitigation, operational solutions, and staffing services to the mortgage industry. Kramer will work to expand the commercial real estate special servicing business in the company's Quantum Servicing unit in Tampa, Florida.

The industry has completed about 975,000 permanent loan modifications so far in 2010, according to estimates released this week by the HOPE NOW Alliance. Of those, only a third have been processed under the umbrella of the federal government's Home Affordable Modification Program (HAMP). Two-thirds have been servicers' own proprietary mod programs. HOPE NOW also reports, though, that servicers have initiated more than 1.2 million foreclosures this year.

Private investment firm Blue Horizon Capital has acquired California-based Veri-tax LLC. A provider of tax verification and fraud management solutions for the mortgage lending and consumer credit industry, Veri-tax clients include two of the nation's top four banks, as well as a slew of other lenders, originators, and financial institutions. The acquisition is expected to support the company's growth and the expansion of its fraud detection, management, and mitigation services.

Loan Value Group recently announced that its Responsible Homeowner Reward (RH Reward) program has been included as an alternative resource in Ohio's Hardest Hit Fund (HHF) plan for homeowners who are underwater on their mortgage but may not qualify for the official state-run programs. The RH Reward program provides cash incentives to homeowners who remain current on their mortgages, and Ohio says it is a valuable incentive to deter strategic default and even reduce principal for some borrowers with negative equity.

The national mortgage delinquency rate - measuring the ratio of borrowers 60 or more days behind on their payments - fell again in the second quarter of 2010, suggesting credit conditions in the housing sector have begun to stabilize, according to TransUnion. Data released Tuesday by the credit bureau show that the national delinquency rate dropped to 6.67 percent in Q2. That's down from 6.77 percent during the previous three-month period, which marked the first time in 12 quarters that TransUnion recorded a decline in mortgage delinquencies.

Gov. Deval Patrick has signed into law a package of foreclosure initiatives that he says will keep people in their homes and stabilize neighborhoods across the Commonwealth of Massachusetts. The legislation was deemed an emergency measure by lawmakers. In addition to extending the mandated 90-day right-to-cure on foreclosures created in 2007 to 150 days, it creates new protections for tenants renting apartments in foreclosed buildings and establishes mortgage fraud as a crime.

The U.S. Federal Reserve on Monday published a long list of rules outlining new requirements that will govern compensation to mortgage professionals and disclosures to borrowers regarding their home loans. Among the new regulations are a ban on controversial yield spread premiums, and a stipulation that requires lenders to provide borrowers with a payment table, which includes a ""worst case"" scenario showing the maximum interest rate and mortgage payment they might see over the life of the loan.

Fannie Mae has issued a new bulletin to lenders underscoring the GSE's requirement that every mortgage loan delivered to Fannie Mae be underwritten to ensure the borrower has the willingness and ability to repay the debt. To this end, Fannie Mae said it expects lenders to have procedures in place to facilitate borrower disclosure of changes in financial circumstances throughout the origination process. This, however, does not mean lenders must pull a second credit report on the borrower prior to closing.