With home buying and affordability in crisis, mortgage servicers face increasing pressure to maximize returns on loans in the face of rising defaults. A negative trend intensifying this pressure is the declining presence of loss mitigation solutions in place for borrowers. Our deep dive into loss mitigation provides enhancements for traditional techniques servicers may utilize to navigate current market conditions.

Loss mitigation strategies in the subprime era of 2008 were more straightforward. Mortgage servicers could offer loan modifications providing lower interest rates to lower payments for borrowers while allowing servicers to improve loan performance. However, surges in market interest rates have created more risk and have complicated the landscape.   

We analyzed new strategies mortgage servicers could implement to address the complexities of the current market. Our insights combine the analysis of fundamental loss mitigation principles with a forward-looking approach leveraging data-driven loss mitigation and default servicing automation.