Exploring Alternatives to Foreclosure and How to Take Control of the Situation

By: Mike Rawls  

The global pandemic and resulting economic fallout have thrown the mortgage industry into unchartered territory. On one hand, low interest rates and high demand have catapulted housing prices in many markets. On the other, many Americans continue to navigate their way through the financial hardships COVID-19 brought on their families. Many homeowners are still not seeing their incomes restored and are finding it difficult to pay or maintain their mortgages. In fact, roughly 2.1 million homeowners in the U.S. are currently enrolled in forbearance and are at risk of foreclosure. 

A priority goal of the mortgage industry should be to keep families in their homes—but realistically, there will be many homeowners who will be unable to keep their property. Once the foreclosure process starts, homeowners have few options. By taking proactive action with borrowers before they default, servicers allow homeowners to explore options on transitioning to a new beginning, leveraging Xome’s internal and external resources. 

Once foreclosure moratoriums are lifted, servicers will find themselves faced with balancing credit loss while helping borrowers retain equity and assisting them with a dignified exit. As we learned from the 2008 housing crisis, a backlog in loss mitigation pipelines that coincides with high foreclosure rates can be extremely disruptive to the industry. 

TAKING CONTROL OF THE SITUATION
Without a doubt, foreclosure should be avoided at all costs—it’s best for the borrower, the servicer, and the communities hit hardest by this crisis by limiting the volume of bankowned properties that negatively impact home values. When it gets to the point when borrowers are unable to make payments, servicers can explore platforms like the Xome® Xpert Seller program. The Xpert Seller program compliments the servicers existing loss mitigation process, while creating additional capacity and resources for the servicer with Xome managing the listing and sales transaction process directly with the real estate professional and the homeowner. The program connects borrowers with real estate agents from Xome’s national agent network and guides them step-by-step through the process of selling their homes before they reach foreclosure. 

HOW IT WORKS: 

  • Initiation: Borrowers who choose to participate in the program are provided with qualified local agent options from Xome’s nationwide real estate network who begin the process of onboarding and listing. This includes a detailed property analysis to develop a comprehensive marketing strategy. 
  • Marketing: Xome lists the property on its website as well as syndicate listings with Zillow, Trulia, Realtor.com, and other real estate websites while the agent conducts open house events to drive foot traffic and generate awareness. 
  • Xome Auction: The property is placed in live online auctions that run every other week for four days, providing maximum exposure to encourage competitive bidding and get the property sold quickly. 
  • Xome recently hit its 100,000th home sold on its auction platform. 
  • Results: The agent consults with the homeowner to go over offers and make a decision. If no offers are accepted, the property will be placed in the next auction
    event. 
  • Closing: Xome’s Xpert Seller program panel agents work with all parties to close the deal—including inspection, title review, escrow, closing, and funding. Xome understands the complexity and need for diverse solutions to fit homeowners of all circumstances. Since 2013, the company has been leading the way in end-to-end real estate and mortgage solutions for servicers focused on providing the best customer service for their borrowers. 

WHAT COMES NEXT 
With recent extensions around forbearance and foreclosure protections, impacted individuals have a little more time to explore their options. 

The administration has extended forbearance and foreclosure protections for homeowners with federally guaranteed mortgages currently through June 30, 2021—giving individuals that have been impacted time to explore their options. Unfortunately, not everyone will be able to get through the crisis unaffected. An increase in defaults related to the global pandemic will eventually arrive. 

Servicers have an obligation to help homeowners explore all their options fully while reducing neighborhood blight and assisting in stabilizing home values. Mortgage servicers need to be proactive in their approach and start connecting with their customers who are at risk with options like Xome’s Xpert Seller program. When servicers make the decision to engage with a provider that can manage their assets across all stages, they position themselves to successfully manage the work by creating additional capacity. As an industry, we can navigate through these challenging times together while keeping homeowner interests at heart. 

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