As Markets Change, Focus Turns to Loss Mitigation

MBA (4/23/2008 ) Palaparty, Vijay
In an environment of increasing foreclosures, companies such as Integrated Mortgage Solutions, Houston, channel efforts on loss mitigation, providing collateral protection for the mortgage industry.


“In the current housing market, loss mitigation has proven to be very important and outsourcing loss mitigation is an area where lenders have show a strong need,” said Cheryl Lang, president of IMS. “Lenders may not have the capacity to hire and train professionals in these areas and IMS provides a third-party option—U.S. outsourced—and what we are trying to do is ultimately provide efficiencies, reducing associated costs, risks and administrative burdens."

IMS provides inspections, preservation, quality control checks and prepares properties for auction. Lang said 70 percent of distressed borrowers do not contact their lenders and often prefer an outside entity to work with them. Through its IMS Saves Homes program, the company offers options to borrowers in an effort to provide some resolution.

“Lenders definitely do not want properties back—that’s a common misconception today in the media,” Lang said. “[We] provide services that seek to keep borrowers in their homes. It's the least-costly option for everyone involved.”
The company also offers an online option for its clients to provide borrowers with forms on their web sites that borrowers can fill out to begin the process of loan modification or other action. The online option interfaces directly with client web sites, avoiding the need to rebuild the back end of the interface.

IMS services for REOs include property inspection and maintenance. As REOs continue to cause problems in some heavily impacted regions throughout the country, the company provides technology called Web Phone, enabling property inspectors to upload inspection information in real time. Lang said Web Phone eliminates the need for printed materials and allows servicers to mitigate potential errors in the default department.

“REOs are certainly problematic,” Lang said. “Municipalities are looking for lenders to register these properties—especially in the preforeclosure stage. "There is a period in pre-foreclosure when lenders may hesitate pay to register properties, but registery after the property is foreclosed and vacant is inevitable. REOs create situations where lenders are asked to put forth money on something they are already losing money on. It's an expectation."

As far as assisting with liability for mortgage servicers, the company recently launched a non-profit organization called No Paws Left Behind. It provides tools and resources for homeowners in the foreclosure process to relieve themselves of their pets. Additionally, it also assumes liability for removing pets while a home is still in the foreclosure process. The effort allows lenders and servicers to thoroughly clear a property and also avoid the pitfalls of abandoned pets that are commonly left in homes.