Analytics Firm Offers Service to Predict Defaults, Eyeing Homeowners Associations
Soon after FICO announced a new service that will help credit unions' mortgage servicers, among others, predict mortgage defaults, another firm has announced a similar service that will predict default by looking at late fee payments to homeowners associations.
Sperlonga Data and Analytics, a subsidiary of national real estate firm MMREM headquartered in Arlington, Va., says its Loss Mitigation Association Surveillance will keep lenders up to date on borrower problems with HOA fees, an area which the firm says has been notoriously hard to track.
“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. “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 explained. “And in the case of loan mods, it can be even more critical to minimize losses.”
The service provides an authorization form for servicers to execute with the borrower during the loan modification process that allows the firm to communicate directly with the HOA, Sperlonga explained. Sperlonga then monitors monthly payments and notifies the servicer if the borrower misses a payment, providing a warning to trigger servicer attention that a potential default is looming, the firm added.
“Essentially, Loss Mitigation Association Surveillance allows for greater communication between servicers and HOAs, which is what they both want,” Martin said, adding that HOAs and servicers frequently lack basic contact information and do not know how to communicate with one another.
“This service helps associations get paid what is due them so they can keep operating, while at the same time minimizing expense for lenders and their servicers in pursuing either home retention or re-marketing the property,” he said. “It helps avoid delays that result in excess inventory in the market, and that’s good for everyone.”