On November 27, ten members of the Mortgage Servicing Collaborative convened for a subcommittee meeting on non-performing loans as part of work stream 5. There are two issues in focus for this subcommittee, both related to FHA’s loss mitigation toolkit:
- Burdensome documentation requirements
- Face-to-face interview requirements
On burdensome documentation requirements, there was broad subcommittee agreement that detailed expense documenting is a painful process for borrowers and is an expensive requirement for servicers to comply with. HFPC will look at the cost of collecting this documentation and review the extent to which data may show whether it works. On FHA face-to-face interview requirements, there was broad subcommittee agreement that this is a painful and antiquated requirement for both borrowers and servicers, and is expensive for servicers to comply with. The subcommittee discussed whether the face-to-face requirement should be eliminated or retained but limited in scope for cases such as natural disasters. Another discussion point was whether mandatory default housing counseling is an alternative solution to consider. HFPC staff will examine the mandatory default housing counseling option as a solution, and whether removing the requirement and allowing servicers the discretion to conduct a face-to-face meeting with a borrower is also a solution.
Next step: Subcommittee is writing a blog to post on Urban Wire about these two topics.