Fighting Foreclosure with New Technology
Lenders Rely on New Counseling Portal to Keep Homeowners in Their Homes
With U.S. foreclosures climbing 79 percent in 2007 and hitting triple digits in certain states, leading lenders, credit counselors and CSC have joined forces on new Web-based technology to help keep homeowners in their homes.
The EarlyResolution Counseling Portal (ERCP) is the key focus of the Technology Committee of the HOPE NOW Alliance encouraged by federal agencies. The new portal provides a common technology platform for loan servicers and nonprofit counseling agencies to share loan information electronically, eliminating paperwork and roadblocks associated with working out loans with borrowers in default.
The benefits of credit counseling are well documented. Some 75 percent of delinquent borrowers are afraid or embarrassed to call their lender, but an estimated 75 percent of borrowers who receive counseling are still in their homes after 12 months.
“ERCP guides credit counselors through debt management sessions with borrowers and, based on the borrower’s response and financial situation, will calculate one or more eligible workouts for the mortgage,” explained Kevin Schlumpf, managing director of CSC’s EarlyResolution practice. “That information is packaged and sent back to the servicer to complete loss mitigation activities.”
Support from Leading Lenders
The portal is based on CSC’s EarlyResolution software, a loss mitigation tool used by five of the top 10 mortgage servicers to reduce credit losses and create effective solutions for borrowers in default. It is a hosted application accessed over the Web, so there’s no software to install.
Participants in the initial release of the portal include Wells Fargo, Bank of America, Countrywide Home Loans and the nonprofit Atlanta Consumer Credit Counseling Service. Ed Delgado, senior vice president of Wells Fargo Home Mortgage, said he’s impressed by the portal’s ability to quickly provide credit counselors with loan information and pre-qualified rules for workouts.
Faster, Easier Service
“We’re impressed with the speed and ease with which the nonprofit counselors can communicate with the loan servicer,” said Delgado, who also serves as chairman of the HOPE NOW Alliance Technology Committee. “ERCP is such a nimble tool for servicers to use in promoting loss mitigation — now you’ve put that technology in the hand of nonprofits. It really helps expedite the decisioning and referral process.”
ERCP contains a rules engine with preconfigured workout rules, contributed by the participating HOPE NOW investors and government agencies including Freddie Mac and Fannie Mae. It is also flexible enough to allow servicers to adjust as needed to meet their specific servicing guidelines and investor compliance requirements. The software’s Web-based deployment enables nonprofit counseling agencies to quickly scale up to a national solution.
“Since credit counselors have a scripted tool to guide them through the process, they don't have to worry about training on workout options, and they can handle higher volumes of borrowers in distress,” Schlumpf said.
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