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» VISIT US ONLINE @ DSNEWS.COM COVER STORY INDUSTRY INSIGHT INDUSTRY INSIGHTS BEST PRACTICES T Communicate to Mitigate By John Alkire, Carrington Mortgage Services When dealing with something as difficult and complex as loss mitigation, it's surprising how often the most successful solutions are also the simplest. Taking a very basic approach to loss mitigation, servicers should work around three key principles: Keep the borrower in the house; keep the property cash flowing; and protect the value of the underlying asset—admittedly very straightforward concepts, but ones that keep us focused as we take the necessary steps to execute a successful loss mitigation program. Step One: Aligning Interests One of the underlying principles to this basic approach is to not look at loss mitigation as a zero sum game, where one party wins and the other loses, but as one that aligns everyone's interests: the borrower's, the investor's, and the servicing operation. Very often, the best possible outcome for all parties is to convert a nonperforming loan into a performing loan: The borrower gets to stay in the home, the investor's interests are protected, and the home itself continues to be POINT— COUNTERPOINT he housing crisis and the recession that followed have altered the mortgage servicing landscape and the American economy as a whole. Servicers today are working to minimize legacy losses and build a stronger, more resilient housing finance system by stabilizing risk and improving default management procedures. DS News asked professionals from three different areas of the mortgage industry to weigh in with their thoughts on the type of strategies servicers should employ to curtail credit losses. maintained. Loss mitigation strategies that strictly look at return from the perspective of "foreclosure vs. loan modification" often miss this key point and are likely to be less successful. Step Two: Intervening Early It may sound obvious, but in cases of pending mortgage default, connecting with the distressed borrower as soon as possible to let them know you are there to work with them—and hopefully help them stay in their home—is crucial to minimizing loss. This is much easier to do if you've previously established a relationship with the borrower—something that's become increasingly difficult to do in an era of enterprise-sized servicing operations and frequent transfers of servicing rights. In terms of connecting with these borrowers, what is really needed is actual person-to-person contact. In a market that has become much more heavily reliant on automation, outreach to borrowers needs to involve actual conversations with real people who can answer a borrower's questions and take the time to listen to what they have to say. This "high-touch" approach to servicing is proven to work. Sometimes, a borrower's ability to have a conversation with someone in the servicing 49

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