Loss Mitigation

Neil Barofsky, TARP special inspector general, has been highly critical of the government's foreclosure prevention programs. On Tuesday, he put the administration's new initiatives to help unemployed and underwater homeowners under the microscope. Barofsky says several issues could impede program effectiveness, including the voluntary nature of principal write-downs, disparate appraisal requirements across subprograms, and the short timeframe given for unemployment forbearance.

Technology provider ISGN Corporation has partnered with EquityRock, a pioneer in residential real estate equity sharing, to create a unique loss mitigation solution that allows lenders who offer mortgage principal reductions to retain a stake in the property's future appreciation. According to the two companies, the solution is the first equity sharing loan modification service of its kind in the industry.

First American CoreLogic, a Santa Ana, California-based provider of advanced property and ownership information, analytics, and services, announced Tuesday that it has joined forces with The Prieston Group (TPG) to offer a comprehensive fraud prevention and insurance solution to mortgage lenders. The new solution combines First American CoreLogic's pattern-recognition fraud tool with TPG's risk management services, indemnity programs, and training.

Loan Value Group LLC, a solutions provider that helps mortgage lenders address the risk of strategic default, has named Craig Lipsay as managing partner. In this role, Lipsay will work directly with institutional clients to implement the company's Responsible Homeowner Reward, a program that provides cash payments to eligible homeowners affected by negative equity as long as they remain current on their mortgages.

DepotPoint, Inc. recently announced that it has launched a real estate agent network and modified its proprietary short sale solution to be fully compliant with the administration's Home Affordable Foreclosure Alternatives (HAFA) program, which went into effect on April 5.

Just four months after the fourth round of National Foreclosure Mitigation Counseling (NFMC) Program funds were appropriated, $59.5 million was awarded to 35 state housing financing agencies (HFAs), 15 HUD-approved housing counseling intermediaries, and 81 community-based NeighborWorks organizations to provide counseling to homeowners facing foreclosure, according to a recent announcement by Washington, D.C.-based NeighborWorks America, administrator of the NFMC Program.

The Michigan State Housing Development Authority recently submitted its plan to the Treasury, detailing its intentions to use the majority of the $154.5 million it received under the Hardest Hit Fund to help unemployed borrowers. Through a nonprofit corporation set up specifically for the purpose of being an ""eligible entity"" under the Hardest-Hit Fund, MSHDA plans to administer three programs, including the Unemployment Mortgage Subsidy Program, the Principal Curtailment Program, and the Loan Rescue Program.

LenderLive Network Inc. said Monday that it has helped Caliber Funding streamline the upfront disclosure and good faith estimate (GFE) issuance process for brokers by creating completed signature-ready documents with a single click. Arizona-based Caliber Funding, started its partnership with LenderLive in 2007 with document preparation for back office services. Since then, the industry has changed drastically and more broker-specific regulations have been put into place.

Bank of America says it is considering giving unemployed homeowners nine months of no mortgage payments while they search for a new job. If during the nine-month forbearance period, the borrower is successful in finding employment, BofA would structure a mortgage modification. If unsuccessful, the customer must be willing to relinquish the home through a deed-in-lieu. The proposal must be approved by regulators before it can be implemented.

The earnings season for big banks is starting off in positive territory, and well above analysts' expectations. JPMorgan Chase & Co. reported last week that it brought in net income of $3.3 billion during the first quarter of 2010, or $0.74 per share. The market was expecting earnings of $0.65 a share. The numbers represent a 55 percent improvement over a year ago, largely due to big gains in its investment banking business. JPMorgan's consumer credit portfolios didn't fare as well, but the bank's chief did indicate that loan quality is improving and delinquencies are beginning to stabilize.