DS News - U.S. Bank

74 borrower. at's why servicers remain focused on helping homeowners avoid foreclosure, even if retention efforts are not possible, by offering options such as short sales or deed-in-lieu agreements when appropriate. THE DRIVE FOR POSITIVE OUTCOMES Servicers are certainly driven to produce positive outcomes, not only for their customers, but for their employees, communities and shareholders. When a mortgage loan fails to perform as contractually required, the tremendous range of variables that must be evaluated, tracked and managed is best handled with the help of robust servicing and loss mitigation technology and tools. ese systems are the backbone that help enable responsible analysis and the appropriate decision-making that may help transition a non-performing mortgage loan into a workable solution for a struggling homeowner. DATA AND DOCUMENTATION e days of forcing distressed homeowners through the difficult process of finding and submitting the data and documentation that is required in order to be considered for a mitigation option is untenable in today's world. Most servicers should be able to gather all the data and documentation that is needed through automated data access to both internal information and external public records. Once gathered, this information can then be utilized to conduct the required analysis by deploying automated rules and decisioning tools to help determine the best options for borrowers. Of course, this is a very high stakes process – for both the homeowner and for the servicer. It is imperative that each step taken in the mitigation process is the right one, is completed at the right time, and that all available data and documentation is fully considered. Every part of the process - including every number that goes into each computation, every loss mitigation option that is considered, and every reason given for the conclusion that is ultimately reached - must be recorded and accessible to all interested parties, including regulators. TRANSPARENCY AND AUDITABILITY While a data and technology-driven decisioning engine can dramatically reduce the probability of errors in the process, the outcome of the mitigation analysis impacts both individuals and families, often in life- changing ways. erefore, nothing can be left to chance, and everything must be done according to very precise rules. at's why auditors from the CFPB, the OCC, or others who are designated to evaluate these decisions may wish to review and validate each step in the mitigation process to make sure no detail was overlooked or mishandled. Servicers must be able to demonstrate the reasons why they believe the conclusion they have reached is the right one for a particular homeowner, and to prove that rules were correctly executed given the unique circumstances of the borrower under review. To accomplish this level of transparency and precision, servicers typically deploy a robust rules engine that is not only able to execute on the decisioning process across multiple mitigation options, but that can also record each step in that process – along with associated timestamps - so servicers can clearly demonstrate how and when decisions were made. is rules-based approach enables auditors to examine fact-based evidence to verify that no questionable areas exist in the process, and that the outcome for each specific borrower is the right one. It also helps to assure auditors that rules are followed consistently from one customer to the next, without exception. Whether the required loss mitigation rules are associated with programs from Fannie Mae, Freddie Mac, Ginnie Mae, HAMP, or others that are established by the servicing organization itself, transparency and auditability of loss mitigation processes and decisions is vital to achieving a positive regulatory review. Rules-supported decisioning is also a key success factor in helping servicers ensure that decisions not only adhere to regulatory requirements, but are also compliant with internal policies and procedures, and appropriate for each borrower's particular circumstances. THE DRIVE FOR COST CONTAINMENT According to a recent MBA Servicing Operations Study, the average cost of servicing a performing loan is over three times higher now than it was during the pre-2012 years. e Study reports that the average cost of servicing a performing loan rose from $59 per loan as reported in 2008, to $181 in 2015 – a significant increase from the 2008 baseline. In addition, during this same period, the average cost of servicing a non-performing loan ballooned to nearly five times the amount it was during the pre-2012 years. e Study reports that the average cost of servicing a non-performing loan rose from $482 per loan in Of course, this is a very high stakes process – for both the homeowner and for the servicer.

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