Loss Mitigation

ISGN Corporation has added a new Invoice Processing System (IPS) to its LenStar technology, a Web-based attorney and referral communication system for the default management market. The company says the new solution allows lenders and their attorneys and vendors to settle accounts payable and receivable quicker and with fewer errors than with manually toggling between accounting and invoicing systems.

The House Committee on Oversight and Government Reform has launched an official investigation into the federal government's foreclosure prevention program. According to a statement from the head of the committee, the probe was triggered by complaints that servicers have been slow and inconsistent in modifying loans under the Making Home Affordable (MHA) program, and are not communicating clearly with eligible homeowners.

Multiple bank closures have become commonplace on Friday evenings, but last week, regulators shut the doors on just one institution-1st American State Bank of Minnesota. The bank operated two local branches in Hancock, with $16.3 million in deposits and $18.2 million in total assets. It was acquired by Community Development Bank, also in Minnesota.

The comprehensive Home Affordability and Stability Plan, introduced by the Obama administration in March 2009, was created in hopes of providing refinance and modification options for millions of homeowners. So far, though, that hasn't been the case. However, Fifth Third Mortgage Company, a financial services company headquartered in Cincinnati, Ohio and a subsidiary of Fifth Third Bank, says it has done its part to help homeowners stay in their homes.

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.

As foreclosures continue to plague the nation, many at-risk homeowners are seeking help through home preservation events sponsored by the HOPE NOW alliance, the Obama administration's Making Home Affordable Program, and NeighborWorks America.

Although government-approved programs and bailouts are in place for many sectors of the battered economy, the resources and solutions for property owners and investors in the heavily-distressed commercial real estate market are lacking. Help is available to commercial property owners, but it is not widely known about. As a result, commercial properties continue to face foreclosure, and commercial real estate is expected to remain a drag on the U.S. economy through 2010 and beyond.

A key Treasury official is publicly speaking out against new rules that would require lenders to retain some of the risk on mortgages and other assets sold to investors. At the American Securitization Forum's annual convention this week, Comptroller of the Currency John Dugan urged policymakers to focus reform efforts on improving loan underwriting standards, rather than risk retention proposals that could hamper an already-tenuous securities industry and further diminish credit availability.

Lenders Asset Management Corporation (LAMCO), a nationwide REO management company, said Thursday that it has enhanced its disaster recovery plan, which details LAMCO's procedures for responding to emergency situations, such as natural disasters or accidents, that could potentially threaten service level agreements.

Problems in the commercial real estate sector have put Congress on the offensive. House members are particularly concerned with guidance issued be federal banking regulators, advising lenders to extend or restructure loans backed by income-producing or development properties. Lawmakers say there are indications these loans are not being serviced properly, and evidence that regulators themselves are triggering defaults by encouraging lenders to write down the value of performing loans when payments are current.