New Service Tracks HOA Payments to Predict Mortgage Default

June 13, 2011 No Comments »

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If you’re thinking about walking away from your mortgage, you might start by skipping out on your HOA dues.

Unpaid HOA dues tend to be a clear sign of impending mortgage default, but they’ve been difficult for loan servicers and mortgage lenders to track.

Enter a new service from Sperlonga Data and Analytics called “Loss Mitigation Association Surveillance” (LMAS).

In short, it provides an authorization form for servicers to execute with the borrower during the loan modification process so they can communicate directly with the HOA.

From there, they can monitor monthly HOA payments and receive alerts if the borrower misses a payment.

The product complements an existing product called “HOA Delinquency Check,” which ensures a borrower is not severely delinquent on HOA dues prior to a loan modification or short sale.

“In the majority of the cases, borrowers will stop paying their HOA fees before they stop making their mortgage payment,” said Matt Martin, Sperlonga’s chairman and CEO of MMREM, in a release.

“Knowledge that a borrower is late or delinquent on HOA fees will allow servicers to get in front of a loan that’s about to default,” he added. “And in the case of loan mods, it can be even more critical to minimize losses.”

So it looks like servicers and lenders are getting smarter on strategic default, despite the fact that it still takes years to actually push a homeowner through the lengthy foreclosure process.

But perhaps times have changed, and excessive foreclosure timelines will begin to shrink.

Last week, Fannie Mae made it appear as if they want to speed things along

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