Jane Johnson is the senior vice president of loss mitigation services for ServiceLink
. Johnson is responsible for all loss mitigation operations, including loan modifications, and short sale processing.
Since 1998, Johnson has served in senior positions at Citi Residential Lending
, and AMC Mortgage Services
, which was acquired by Citibank
in 2003. Most recently, she was responsible for providing strategic direction and oversight in the execution of Citibank’s large-scale portfolio of residential mortgage holdings. Before that, she served in various risk assessment, loss mitigation, workout and compliance positions at Countrywide Home Loan
She sits down for this edition of In This Corner
to discuss the problems and potential of short sales and if they really can lead the way to a housing recovery.
Everyone talks about how difficult the short sale process is. What specifically makes it complex?
The process may be complicated for some because there’s an absence of strong collateral-based decision making. That said, over the years we’ve developed and refined our workflows to make the process smooth and efficient.
Streamlining the short-sale process is really about two things: Understanding the needs of the servicer and investor, and looking at collateral and making a decision. Success for an outsourcer, then, demands tenured, dedicated teams that view themselves purely as an extension of the servicer. Everything the team does, from handling phone calls to agent response, should be a seamless extension of the client. The experience for the agent and the borrower should be the same whether dealing with a servicer or with an outsourcer.
Is the Home Affordable Foreclosure Alternatives (HAFA) program really going to streamline the process? If you could change one thing about the program what would it be?
The HAFA program, for all intents and purposes, is really an extension of the Home Affordable Modification Program (HAMP). Homeowners who don’t qualify for HAMP, or have made a decision not to retain their homes, must be considered for HAFA, and that could mean a short sale or a deed in lieu of foreclosure. I’d like to be optimistic, but it’s too soon to know whether this program will be more successful than HAMP.
But HAFA is just being implemented—Freddie Mac
and Fannie Mae
rolled it out in August—so it wouldn’t be fair to judge it yet. We’ll have to give it some time before we could say what works or doesn’t work.
Can you tell how much faster the short sale process has been recently compared to a year or two years ago?
I’d say in some cases, and with some servicers, the process has accelerated. In those cases, that’s primarily because all of the various parties involved are increasingly more familiar with the programs and have developed internal processes streamlining the entire process. Through our own experience we have found that employing devoted short sales teams, who have delegated authority to each of our clients, not only dramatically reduces cycle times but also loss severity.
You have to remember that just a year ago, it could take as long as three months before initial contact was made after an agent submitted a package. Servicers simply couldn’t handle the volume they were receiving, which is why they started reaching out to firms like ServiceLink. We are currently averaging approval to closings in 30 days or less.
The biggest difference we’ve made has been with the proactive approach. Our goal is to make contact within 48 hours of receiving an assignment. So, assuming it takes a week or so for a servicer to assign us a package, what had been taking as long as 12 weeks will be done in less than two. In the process, we’ve helped servicers manage significant backlogs, which can only lead to a more efficient process going forward.
Where in the short sale process do the most hang-ups occur? Is it a particular decision maker or is it something that isn't communicated or overlooked?
The reality is everything we do today has its challenges. We have set up systems and a unique team structure to handle resolution escalation quickly; as such we can tackle most challenges very quickly. Most of the issues we see are with second lien holders and homeowners' associations (HOAs).
I think the better question might be where are we finding success? There, I think the answer is in the way we manage the closing process. Essentially, we manage short sales in the same way we manage our REO business. In other words, we systematically review every piece of the process. With short sales, we’re involved from initiation through liquidation. The minute we obtain approval, we employ a dedicated closing team that, much like REO, manages all the way through liquidation. We support the servicer literally from initiation through liquidation with an emphasis on the closing process.
We haven’t reinvented the wheel, but we have taken significant steps to mitigate the closing process. And that’s making a difference.
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