Loss Mitigation

Over the past year, the mortgage risk analysis firm Clayton Holdings says it has witnessed an overall increase in short sale activity. Because of the growing emphasis on keeping borrowers out of foreclosure, servicers are becoming more inclined to employ alternative loss mitigation strategies. And Clayton says the added benefit to servicers - the one with dollar signs in front of it - is that loss severities for properties sold through short sale are 13 percent lower than loss severities for REO sales.

In a near unanimous vote of 406 to 4 Thursday, the U.S. House of Representatives passed a bill intended to replenish the coffers of the federal agency that insures mortgages against default. The legislation grants the Federal Housing Administration the authority to nearly triple borrowers' annual premium cap, from the current rate of 0.55 percent, to as high as 1.50 percent. The federal mortgage insurer says this will generate an estimated $300 million a month in additional receipts, while costing the average FHA borrower $42 more in monthly premiums.

If one were to rely solely on the headlines, you might be inclined to think that all mortgage-holders whose loans are underwater are planning on throwing in the towel and allowing the property to go into foreclosure. Admittedly, some do intentionally plan a strategic default. However, new data from the National Foundation for Credit Counseling demonstrate consumers' desires to stay in their homes, with less than one-fourth of respondents in agreement that mortgage default is justifiable simply because the property is underwater.

Condo Terminators, a specialty consulting group of Morningside Mortgage Corporation, in Bay Harbor Islands, Florida, has completed the filing process for what the company says is Florida's first mass short sale of a failed condominium conversion. The company says this project is expected to lead a wave of ""condominium terminations,"" resulting in mass short sales of failed condominiums and reversions to apartment buildings.

As the government and the mortgage industry continue to work together to curb foreclosures, RE/MAX agents are doing their part to help facilitate short sale transactions, using their certified training and a new customized version of Michigan-based Elk Software's flagship technology platform, Short Sale Commander.

In order to provide further assistance to Maine homeowners at risk of foreclosure, the Bureau of Consumer Credit Protection signed a contract Monday with the Washington Hancock Community Agency, adding a ninth certified housing counseling service to the list of nonprofit agencies currently under contract around the state. According to Will Lund, superintendent of the Bureau, there is a definite need for housing counselors in Washington and Hancock counties, as more than 1,000 residents in these areas defaulted on their mortgages in the last year alone.

First Preston Management, a national real estate marketing and management firm, has been selected by HUD to provide property management services for HUD's single-family asset portfolio in 11 states, including Arizona, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, North Dakota, South Dakota, Wisconsin, and Wyoming.

Since the government's Home Affordable Foreclosure Alternatives (HAFA) program was implemented just over two months ago, Loan Resolution Corporation, a pre-foreclosure asset management firm based out of Scottsdale, Arizona, says it has been assigned more than 10,000 HAFA requests. Loan Resolution executives attribute the growth to the company's ""quality over quantity"" approach when it comes to helping homeowners avoid foreclosure.

A $1 billion net increase in office loan delinquencies has fueled a 49 basis point rise in past due loans held by commercial-mortgage backed securities (CMBS), according to the latest index results from Fitch Ratings. The firm's data shows the CMBS delinquency rate at 7.97 percent for the month of May. With the increase in the number of loans going bad, Fitch notes that more and more CMBS assets are being transferred to special servicers. Though loan resolutions increased in 2009, the inventory of U.S. CMBS loans in special servicing is at an all-time high.

Green River Capital (GRC), an REO asset management and loss mitigation provider headquartered in West Valley, Utah, has launched a new full-service valuation company, Infinity Valuation Services (IVS), which will focus exclusively on distressed properties. IVS provides appraisals and property inspections, as well as broker-price opinions (BPOs) by leveraging Green River's established, nationwide network of 8,000 REO brokers who are well-versed in the distinct parameters that come with valuing foreclosures, short sale properties, REOs, and other non-performing assets.