Over the next couple of years more resources than ever will be invested into loss mitigation efforts. Foreclosures are at historic levels prompting lenders to consider doing many more loan modifications, forbearance’s and short sales. One would think that there would be sophisticated tools available to lenders who want to do this fairly and responsibley or at the very least some industry accepted best practices - but there aren’t. Like many things associated with this mortgage meltdown, many of the assumptions associated with risk never took into account the dynamics that led to the meltdown in the first place such as how these so-called exotic loans would perform in a market where property values were going south. The new housing bill contain a lot of goodies aimed at homeowner retention but in order to get at least a reasonably efficient net result it is imperative that some basic loss mitigation protocols receive industry wide acceptance. The question is what should be standardized and who should establish them. I’ll take a shot at these questions next week but would love to hear some other views. GA     

Tags: Add new tag, Fannie Mae, foreclosures, Freddie Mac, GSE's, HUD, loss mitigation, mortgages, OCC, OTS, sub-prime mortgages, Treasury

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