Magazine article Mortgage Banking

Sound Financial Ground

Magazine article Mortgage Banking

Sound Financial Ground

Article excerpt

LENDERS HAVE A HUGE STAKE IN PREVENTING BORROWERS FROM ENCOUNTERING financial trouble. Servicers suffer greatly when a loan goes into foreclosure. But today's servicers also realize when borrowers go under and lose a home, there is a loss that is bigger than just the cost of one foreclosure. Preserving homeownership--not just getting borrowers into a home--is a new mantra in the industry among leading servicers, mortgage insurers and investors.

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A growing body of research is showing consumer credit counseling or financial management education may be a long overdue part of the loss-mitigation arsenal. Arguably, this type of meaningful education needs to happen prior to origination--perhaps in the high schools. Bankruptcies today are at very high levels and showing no signs of abating. That suggests credit education would greatly help those consumers who are falling into financial disarray and suffering the consequences. But few servicers can control what happens prior to origination. Yet, some innovative players in the mortgage industry have decided the time has come to use credit counseling when they encounter borrowers in delinquency trouble. …

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