A study to determine the effectiveness of loss mitigation strategies in the home mortgage finance industry.

摘要

Regardless of the reasons for default and despite efforts made by governmental agencies and mortgage finance experts in the development of loss mitigation strategies as a means of circumventing foreclosure, lending institutions continue to foreclose on residential loans at an unacceptable level. Because mortgage loan financing and foreclosure are directly linked to the economic health of the nation, and because the impact of foreclosure is not simply felt by the borrower alone, reducing the foreclosure rate is crucial. This study's purpose was to create a comprehensive listing of possible foreclosure alternatives, determine the extent to which these remedies are utilized, and to judge their effectiveness.; Literature was provided which identified 8 loss mitigation programs commonly available to lenders and indicated under what set of circumstances these options should be utilized. Self reported opinions of survey respondents were solicited and examined as a basis for understanding existing perceptions, conditions, effects, and trends that contribute to the failure of loss mitigation programs established to reduce foreclosure.; The population for this study consisted of 100 loss mitigation experts working at the top FHA lending companies with a combined loan portfolio value of over {dollar}90 billion. An on-line survey was developed and issued to these industry experts to capture data regarding the awareness, use, and perceptions regarding the effectiveness of the 8 loss mitigation strategies. The number of respondents who participated in the study totaled 45.; An analysis of the data returned from the survey indicated that experts in the field of loss mitigation are not very confident regarding the effectiveness of existing loss mitigation strategies. Further, the awareness level of certain strategies is limited, probably the reason why some strategies are not offered as often as perhaps they should be.; To improve the effectiveness of current loss mitigation strategies, industry experts must be continuously exposed to and trained on the effective use of these strategies. Tracking the effectiveness of foreclosure remedies and under what conditions these remedies were offered, will provide guidance to loss mitigation experts when determining which remedies should be offered to borrowers whose loans have entered the foreclosure process.