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5 July 2024 M T E C H WATERFALLCALC HELPING MORTGAGE SERVICERS BEAT FHA DEADLINE FOR PAYMENT SUPPLEMENT AGREEMENT W aterfallCalc, a provider of guidance and loss mitigation technology for mortgage servicers, announced it has released the FHA Payment Supplement Agreement (PSA) documentation and automated claim process ahead of the January 2025 deadline imposed by the U.S. Department of Housing and Urban Development. The PSA program is a new loss mitigation requirement designed to help struggling FHA borrowers by combining a partial FHA claim to bring loans current with a monthly principal reduction to decrease monthly payments for a three- year period. Donna Schmidt, Founder of DLS Servicing and WaterfallCalc, a provider of automated loss mitigation technology that helps servicers quickly and accurately evaluate any default scenario, said both companies have all the legal documents and waterfall calculations servicers need to begin offering borrowers relief under the PSA immediately. "The PSA program is both innovative and smart, but creates multiple challenges for mortgage servicers," Schmidt said. "For example, most servicing systems are not set up to handle the PSA's three-year payment plan. But if a servicer can find an adequate workaround, the fact that WaterfallCalc has the calculations, documents, and FHA claim filing ready to go, can mean that our clients are well ahead of the game." The PSA program is intended to help FHA borrowers reduce their mortgage payments by 25% without a loan modifica- tion. Because roughly 85% of all mortgage loans have interest rates under 6%, and current interest rates are over 7%, a loan modification would not help most FHA borrowers. The PSA enables mortgage servicers to make a claim to the FHA for a lump sum payment, part of which is used to buy down the borrower's principal over a three-year period. While servicers aren't required to implement the PSA until January 1, 2025, Schmidt said there are several benefits to implementing the program now. Borrow- ers can keep their low interest rates and reduce their payments, so they receive immediate financial relief. Additionally, servicers are better positioned to retain the borrower's loan and reduce their runoff rate, should interest rates drop. The PSA also uses fewer partial claim funds (up to 60% less) to help servicers meet the 25% payment reduction goal, which helps make more funds available later if the borrower needs additional as- sistance. If the target 25% reduced payment isn't possible, the borrower can be offered a partial claim or a recovery loan modifica- tion, whichever can reinstate the loan with the lowest possible payment. Mortgage servicers that work with DLS Servicing can implement the PSA in as little as two days, Schmidt said. In addition to helping servicers implement the PSA program, DLS Servicing provides advice, training, and practical strategies for navigating the complexities of the PSA, as well as handling the new waterfall's unique accounting and reporting require- ments. "Essex prides itself on being a leading servicer of GNMA loans, and our partner- ship with WaterfallCalc has been a key factor in this success," Nathan Sans, Chief Servicing Officer at Essex Mortgage—a WaterfallCalc client—stated. "Donna and her team's exceptional expertise and commitment ensure that we can provide top-tier support to our borrowers. By swiftly implementing innovative programs like the FHA PSA, we are better equipped to assist borrowers facing financial hard- ships, ultimately helping them retain their homes and achieve financial stability. "We have a long track record of being the first out of the gate when new loss mit- igation requirements are handed down," Schmidt said. "Being able to implement the PSA program today means our clients can stay compliant and reduce their losses while struggling borrowers receive the as- sistance they need to keep their homes— which has been our primary mission since day one. FIGURE TECHNOLOGY SOLUTIONS ANNOUNCES FIGURE CONNECT TO DRIVE EFFICIENCY AND TRANSPARENCY ACROSS CAPITAL MARKETS F igure Technology Solutions, a technology platform streamlining the private credit and housing markets, has announced the launch of Figure Connect, a first-of-its-kind block- chain-based multi-seller, multi-buyer marketplace of private credit loans. Figure Connect brings Figure's capital markets buyer universe directly to Figure's loan origination partners. With Figure Connect, originators can receive forward commitments from buyers, lock active bids, control loan pricing to balance profitability and volume, and deliver pools of loans into those commitments. This functionality is facilitated with common, standardized sale terms and documenta- tion. Figure believes its loan origination partners now have unparalleled control over their business with committed liquidity, transparency, and informed loan pricing management—all integrated within Figure's loan ecosystem. Leveraging the power of the Prove- nance Blockchain, a distributed, proof- of-stake blockchain, Figure Connect is designed to drive efficiencies for loan buyers and sellers and reduce an often months-long settlement process into days. Figure Connect helps disintermediate the loan delivery process, standardizing key characteristics of loan pools and sale terms, and creating greater price certainty ahead of the initial loan origination. Ultimately, Figure believes this engen- ders market liquidity by adding certainty of funding to loan originators and collater- al composition to loan buyers. "Figure Connect marks another trans- formative step towards creating the first highly liquid private capital marketplace for loans, as we now offer unique certainty