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DS News June 2019

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

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72 I N D U S T R Y I N S I G H T / V I N C E N T S P O T O Delays in foreclosure proceedings can result in additional costs not only for the lender or servicer but also for other parties involved in the process. According to a 2009 report by CNN Money, foreclosure filings in the U.S. spiked in 2007 by more than 81% over the prior year and increased by 225% compared to 2006. is also resulted in a series of government regulations and interventions relating to mortgage servicing practices that were primarily designed to add greater transparency to the process and protect borrowers by giving them ample notice of the servicer's intent to claim default. To help account for this, the government-sponsored entities (GSEs), Fannie Mae and Freddie Mac, made ongoing adjustments to foreclosure timelines—with established guidelines generally longer for non-judicial versus judicial states. Additionally, temporary foreclosure moratoriums were enacted during this period in certain states to deal with volume spikes in defaulted loans caused primarily from borrowers being "underwater." While this resulted in an unprecedented number of foreclosed homes on the market, these moratoriums may have also given borrowers more time to work with servicers and potentially avoid a foreclosure. THE MARKETS TODAY In 2019, there has been a significant rebound in the economy and the U.S. housing market has recovered nicely. Unemployment is down to record low levels, consumer confidence has risen, new and existing home sales have increased, and home foreclosures have come down drastically. According to CoreLogic data, as of April 2018, the national foreclosure rate was 0.6%, down from almost 4% at its peak. is has been a contributing factor in housing prices increasing substantially in many regions of the country. With foreclosures down significantly and banks/residential mortgage loan servicers today seeing housing markets that have returned to "near normalcy," it begs the question: why do servicers continue to struggle with adherence to GSE foreclosure guidelines? One reason may be cost avoidance associated with the servicer making necessary investments to streamline and shorten the foreclosure process. e foreclosure process is both tedious and labor intensive. It is also highly regulated to encourage transparency and ensure borrowers are treated properly and fairly. Along with the "high-touch" servicing necessary to sustain ongoing dialogue and active interaction with the borrower to maintain homeownership, costs may force the servicer to curtail investment and hold expenditures to a minimum. is may

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