Foreclosures move at a glacial pace in jurisdictions such as Florida and New Jersey, but several other states offer little in the way of consumer protection against overzealous lenders and services that push the boundaries of the law in order to take quick possession of a distressed property.
Foreclosure prevention has been a priority for the White House and housing advocates, but various initiatives have failed because they are too cumbersome when compared to the swift non-judicial foreclosure process of title theory states. Mortgage borrowers facing foreclosure in states such as Alabama, Tennessee, Texas, and Wyoming could lose their homes to foreclosure in the midst of applying for prevention assistance.
Streamlining the Process with Technology
As a government-sponsored entity (GSE) that guarantees mortgages made to American borrowers, it is in Fannie Mae's best interest to help borrowers avoid foreclosure. The GSE has always been innovative in its use of technology to streamline several mortgage processes such as origination, underwriting, refinancing, and servicing. Fannie Mae is now offering a product to help servicers and troubled borrowers to avoid foreclosure by streamlining the prevention process.
The Service Management Default Underwriter (SMDU) is an electronic tool similar to Desktop Underwriter (DU) in the sense that evaluates the financial status of borrowers and makes instant determinations on the steps that can be taken to avoid foreclosure.
According to a recent press release by Fannie Mae, SMDU has been developed and tested over the last three years. In essence, SMDU puts all of Fannie Mae's business rules with regard to forbearance and loss mitigation in the hands of lenders and servicers. This tool has been designed to eliminate weeks from the current processing times of home loan modifications and principal reduction programs.
Overture and Lender Processing Services are two of the mortgage technology solution providers that contributed to SMDU. This software tool has already been adopted by regional banks and mid-level mortgage servicers such as U.S. Bank, Nationstar Mortgage and Flagstar Bank. Although technology plays a major part in the SMDU streamline loss mitigation process, simple consistency and customer service also go a long way in helping foreclosure prevention programs move faster than the entities attempting to take possession of the property in question.