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Default Service Providers Help Cut Losses

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As mortgage servicers meet this week in California, default service providers are courting the group with promises of better results on the management and disposition of distressed assets. A new program that is set to go into effect in April provides servicers and borrowers with incentives to avoid foreclosures by using other loss-mitigation strategies.

An alliance between AssetPlanUSA and DepotPoint will enable mortgages servicers to utilize short sales as an effective loss mitigation tool, the two companies announced today. DepotPoint provides default management technology for the distressed property market, while AssetPlanUSA provides short sale and foreclosure alternatives solutions nationally.

Beginning April 5, servicers will receive incentives to utilize alternatives to the foreclosure process under the Home Affordable Foreclosure Alternatives Program — or HAFA — the two companies said. Servicers are paid cash incentives to cover administration and processing costs, and borrowers receive relocation assistance as well as pre-approved short sale terms before listing their properties.

But few financial institutions are adequately set up to quickly approve short sales — pushing down the success so far with short sales, AssetPlanUSA and DepotPoint said.

Servicers searching for HAFA help can turn to Retreat Capital Management Group, which this month said it added REO- and HAFA-compatible short-sale processing and listing solutions to its loss-mitigation and portfolio-management services.

Econohomes hopes to revolutionize the way REO properties are sold through a new Web site, a Feb. 15 statement said. Investors are able to “bundle and purchase groups of REO properties at significant discounts” or purchase them individually.

Austin, Texas-based Econohomes which reports that it has flipped more than 2,000 REO properties during the past four years, says its inventory includes hundreds of properties in over 35 Midwest and Southeast states. REOs are acquired through high-volume deals with mortgage lenders and servicers.

A new initiative was launched by Lenders Asset Management Corp. — or LAMCO — in anticipation of an expected rash of foreclosures this year, a news release last month indicated. The initiative includes staff training, the recruitment of new personnel and an expansion of office space. It also involves increasing its nationwide network which already includes 25,000 REO vendors.

Littleton, Colo.-based LAMCO said it has helped liquidate more than $5 billion in residential assets for some of the country’s biggest financial institutions.

At the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo that begins tomorrow, Mortgage Contracting Services plans to announce that it has partnered with HomeTelos. The venture promises to streamline communication between servicers and their investors through an automated Web-based platform for managing distressed assets.

“The default servicing sector is very time sensitive, so any opportunity to shorten the timeframe in the preservation approval process — while not also jeopardizing accuracy — is paramount,” Mortgage Contracting Chief Executive Officer Caroline Reaves said in the statement.

MBA’s conference runs through Friday. It is being held at the Manchester Grand Hyatt in San Diego.

Last week, Tampa, Fla.-based Mortgage Contracting said it launched a 24-hour call center for responding to emergency calls on tenant-occupied properties. The service will help servicers comply with the Protecting Tenants at Foreclosure Act.

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