Excerpt from: Mortgage Perspectives
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| January 21, 2009 | | For Better Loan Modification Results, Modern Systems are Needed | After months of lackluster reports on the pace of loan modifications, Rep. Barney Frank (Chairman of the House Financial Services Committee) introduced a TARP Reform bill to specify what Treasury should do to jump-start loan servicers into action.
The bill requires the Treasury Department to develop a plan, including subsidizing or guaranteeing loan modifications made according to terms to Treasury-determined terms. It also provides servicers with protection from liability if an investor protests about loan modifications.
The bill includes many good ideas… but to achieve the policy goal of more loan modifications, loan servicers must undertake systematic changes.
The rigid and standardized process traditionally used in loan servicing should give way to a more creative approach to each loan. New technologies exist to automatically give the servicer full intelligence on each loan and a range of options for each borrower. New tools are beginning to be used by the most innovative companies, but most servicers continue to follow the old model.
While new systems might take a month to implement, a servicer will be much more effective and efficient immediately. New capabilities a servicer could deploy include:
1. Re-fresh rich data on the borrower and property
2. Evaluate all loans through loan models and guidelines practically instantly
3. Determine eligibility for loan mod programs and other work-out options
4. Smart servicer workbenches to simply the mod process
5. Convenient self-service portals for borrowers
Overture's automated decisioning technology designed for
the mortgage industry is uniquely able to meet these demands.
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