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Servicers Leaving Money on the Table

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Mortgage servicers, home lenders and residential loan investors are missing out on income they might otherwise capture when they liquidate real-estate-owned assets.

Oil and gas companies have leases under entire communities. These leases allow horizontal drilling to recover natural gas and oil deposits.

But while mortgage holders can benefit from lease income, many are foregoing the benefit because they are either misinformed or unaware of the potential earnings.

The findings were reported by Wingspan Portfolio Advisors.

“Lenders, investors and servicers are leaving money on the table when they take properties back and when they re-market REO — money the oil and gas companies are eager to pay them,” the Dallas-based company said in an announcement.

Wingspan said it became aware of potentially lost servicer earnings when it started working last year with oil and gas exploration and production companies to help them preserve energy leases in residential communities.

Wingspan Chief Executive Officer and President Steven Horne explained that when a subordination agreement is not worked out when a lease is lost because of foreclosure — significant production lasting between 20 and 30 years can be lost.

“Subordinating a mortgage for an oil and gas lease is not like allowing a typical lien that poses a foreclosure risk,” Horne stated in the announcement. “The mortgagee can still foreclose, but it will not wipe out the lease.”

Horne said that leases can earn mortgage servicers as much as $500 in fees in oil-rich states like Colorado, Pennsylvania and Texas.

In addition, Wingspan says that properties currently in REO portfolios might have former leases that energy companies could renew.

Horne noted that “Tens of thousands of leases were wiped out during the foreclosure crisis.” He added that banks are generally unwilling to execute a new lease on an REO just because they are either misinformed or not aware of the benefits they are missing.

Horne said a recent project conducted for a major exploration and production company led Wingspan to the conclusion that up to 25 percent of the country’s oil, gas and mineral leasehold properties might be in danger of losing their leases unnecessarily.

“Servicers should also know that leaseholders are motivated to help with costs associated with completing loan modifications if it can help keep a borrower in place and preserve an existing energy lease,” the announcement stated.

Wingspan, a Mortgage Daily advertiser, says it is uniquely qualified to bridge the gap between oil companies and mortgage servicers and improve the outcomes. Information about its lease-preservation services is online at www.wingspanportfolioadvisors.com.

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