In recent days the Obama administration has announced that it will begin a concerted effort to crack down on mortgage companies and mortgage loan servicers who are not doing enough to help homeowners at risk of foreclosure. AboutYourMortgage.com supports the administration’s goal of keeping people in their homes.
There are mortgage loan servicers who need to be doing more to help homeowners, however at the same time, especially with the companies who are preferred servicers with our company, many are trying their best to find solutions in the face of unprecedented challenges. These challenges are further complicated by the fact that large percentages of eligible homeowners submit inadequate paperwork or worse yet, for both the homeowner and the servicer they do not submit any paperwork.
“Faced with sluggish progress in its foreclosure-prevention effort, the Obama administration will spend the coming weeks cracking down on mortgage companies that aren’t doing enough to help borrowers at risk of losing their homes. The mortgage companies, also known as loan servicers, have had a hard time getting borrowers to complete the needed paperwork for the administration’s loan modification program. Nearly 60 percent of the 375,000 borrowers who qualify to have their loan modifications completed by year-end have either submitted incomplete paperwork or none at all.” Zibel, Alan. “More pressure on loan servicers.” Associated Press 01 December 2009
A large part of the mortgage company’s problem is simply that the demand to assist delinquent mortgage customers presently exceeds their capacity. According to an MBA press release dated 11/19/09 the combined percentage of loans in foreclosure at least one payment past due was 14.41% on a non-seasonally adjusted basis. This percentage is the highest ever recorded in an MBA delinquency survey.
It is also important to understand that mortgage companies, also known as loan servicers, have a vested interest in quickly resolving delinquent mortgages. The mortgage servicer is often obligated to continue advancing payments to the investor even if the borrower does not pay. These advances will not be recoverable until resolution of the loan, putting some mortgage companies in a cash flow squeeze. The initial contact and boarding of homeowner information by the servicer is extremely critical and time consuming.
The reality to both the homeowner and the loan servicer is that each bears some responsibility in the success or failure of this process. The homeowner must do their part by not just walking away from the problem, but actively seek help and follow through with completing their paperwork. The servicer must find a way to successfully expedite the paperwork process for the homeowner. Neither task can be completed quickly or without frustration.
