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This is when hiring a professional makes sense
In many areas of the state, the economic recovery has been slow and sporadic. Markets which were hit worst continue to struggle. In this time of transition, it’s not always easy to forecast future defaults accurately. Rising markets serve to reverse defaults while static markets may cause an increase in defaults. This is when outsourcing your loss mitigation activities to reliable mortgage outsourcing companies like Outsource2india can really make a difference.
By contracting with a professional loss mitigation servicer you can more easily scale available resources to fit your needs. Outsourcing will allow your firm to completely dismantle your existing loss mitigation structure by replacing it with a flexible lower cost alternative. Outsourcing loss mitigation tasks such as your loan modification underwriting process will allow your company to slim down to a ‘skeleton crew’ while increasing productivity and reduce expenses.
Loan Modification Underwriting Process at Legal Advisor Group
A professional contracted mortgage servicer can provide your company with experienced loan modification underwriters who are capable of rapidly evaluating loan modification requests and can efficiently expedite modification approvals with strict attention given to the adherence of your institutions modification standards, policies, procedures and loss mitigation goals as well complying with the applicable HAMP, Freddie Mac or Fannie Mae loan modification guidelines.
Standardized Mortgage Loan Modification Underwriting Procedures
When a request for a loan modification is received from the borrower, the loan modification underwriter can help to facilitate the collection of all pertinent documentation. The loan modification underwriter will analyze and review the particular circumstances which justify a loan modification. The underwriter will evaluate and assess the borrower’s financial hardship, current income and asset situation and ability to pay. The servicer will determine the home value based on recent comparable in the area. Sometimes even requesting a full updated appraisal report for the modification and will provide the current market value of the property as security for the loan. The loan modification underwriter can ferret out any fraud issues if they exist and determine the borrower’s eligibility for various types of modification programs.
NPV Test Compliance
The loan modification underwriter can utilize the net present value (NPV) test. The NPV test will compare the net present value of cash flows with and without the loan modification. If the NPV test indicates a positive benefit for the lender, a modification approval can be recommended.
Proper Modification Sequence
As part of the modification underwriting process, the modification underwriter will use accepted methods to reduce the borrower’s monthly payments to no more than 31% of the borrower’s gross monthly income (DTI). The modified terms typically start by reducing the interest rate first then if further payment reduction is necessary, the amortization period may be extended to a maximum of 40 years. (This is NOT always the case with most servicers) Finally, principal reduction may be considered as a last resort if deemed prudent. (Although the principle reduction or principle forbearance is available, it is done on a case by case basis.)The overall goal of the loan modification is to lower the borrower’s monthly payment to an amount that is expected to be sustainable for the borrower for the remainder of the loan term.
Streamline Your Loss Mitigation Operation Today!
Outsourcing loss mitigation activities will help to streamline all of your loss mitigation functions. In addition to helping with your loan modification underwriting, we can help to streamline collection calls, foreclosure, and deed in lieu processing as well as short sale negotiations get in touch with us today!
