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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 54 March 2024 S P O N S O R E D C O N T E N T F or mortgage servicers and investors, helping distressed homeowners work out payment challenges through loss mitiga- tion, ranging from loan modification to short sale to deed-in-lieu of foreclosure, is a strategy to also mitigate their losses. "We're not seeing many properties going into default, because the average homeowner has so much equity right now," says Amy Borsi Daniel, SVP, Title & Close, ServiceLink. "When those who are moving toward default can't make pay- ments and need a way out, servicers need to consider a lot of factors: the current value of the home, the amount still owed, outstanding liens, market activity, etc." If the property value is higher than the amount the borrower owes, the servicer reaches out to that customer to explain their options. It's important to be aware of any issues related to the title before having that conversation. "Taking a look at the title before agreeing to a short sale is a smart strategy. Servicers and borrowers can save a lot of time and money that might have been wasted on listing and marketing a property that can't be sold unless its title is cleared," says Jody Walshe, Assistant VP, Deed-in Lieu-Title, ServiceLink. With this in mind, ServiceLink offers the Short Sale Property Report, a tool designed to provide servicers with critical information about a property's title before committing to a short sale. The concise nature of the report ensures that any nega- tive issues jump out immediately. "The Short Sale Property Report reveals whether a title is clear of junior liens, judgments, IRS and state tax liens, code violations, and other issues," Walshe said. "It gives immediate insight into the property and tells them up-front which route—loan modification, short sale, or deed-in-lieu—is likely to be the best path forward." The more information a servicer has up-front, and the more they enlighten the borrower, the better the outcome is likely to be. "A short sale enables the homeowner to sell their property for less than what they owe so they can get out from under- neath the loan completely," Walshe said. "Short sales also represent savings for the investor, because they aren't paying hold- ing costs to keep the property up." Shorter closing timelines are a notable advantage, as low inventory levels persist across the country. Many homes are under contract within 30 days of hitting the mar- ket, Walshe says, making short sales more appealing to both servicers and borrowers who may be eager to sell to avoid impend- ing financial consequences. "Short sales can be a good option for not just borrowers but also those who will be unable to make the balloon payment coming for many who deferred payments during the pandemic," Walshe explained. "If they've already taken out the equity in their home, a short sale may be their best option for avoiding foreclosure." Daniel believes that short sale vol- umes may pick up in the coming months. "Interest rates are making it difficult for borrowers with adjustable-rate mortgag- es to afford monthly payments and for homebuyers to qualify for new mortgages. As we start seeing home values decrease, we could see more homeowners going upside down on their mortgages. Short sales could help," she said. Alternatively, borrowers may be able to deed the property back to the bank through a deed-in-lieu (DIL) of foreclo- sure. Like a short sale, a DIL offers the borrower an exit strategy while protecting their credit from the damage a foreclosure could inflict. Servicers considering DIL need more complete information, and a more comprehensive report, than they do for a short sale. Daniel explains, "If a servicer orders a Short Sale Property Report and the infor- mation comes back indicating short sale is not an option, the servicer can upgrade that report to include everything they HELPING DETERMINE THE BEST PATH FOR AVOIDING FORECLOSURE As servicers work with distressed borrowers to resolve their mortgage challenges, a new ServiceLink tool—the Short Sale Property Report—offers essential insight. S E R V I C E L I N K , the nation's premier provid- er of residential real estate services, partners with servicers, attorneys, and investors to achieve their strategic goals and realize greater efficiencies. ServiceLink helps clients by de- livering best-in-class technologies and proven expertise built on a foundation of service excellence and customized end-to-end services including title and closing, field services, valu- ation, auction, REO asset management, and servicer and attorney reporting and support. To learn more, visit svclnk.com.