Soon after FICO announced a new service that will help credit unions' mortgageservicers, among others, predict mortgage defaults, another firmhas announced a similar service that will predict default bylooking at late fee payments to homeowners associations.

Sperlonga Data and Analytics, a subsidiary of national realestate firm MMREM headquartered in Arlington, Va., says itsLoss Mitigation Association Surveillance will keep lenders up todate on borrower problems with HOA fees, an area which the firmsays has been notoriously hard to track.

“In the majority of the cases, borrowers will stop paying theirHOA fees before they stop making their mortgage payment,” said MattMartin, Sperlonga’s chairman and CEO of MMREM. “Knowledge that aborrower is late or delinquent on HOA fees will allow servicers toget in front of a loan that’s about to default,” he explained. “Andin the case of loan mods, it can be even more critical to minimizelosses.”

The service provides an authorization form for servicers toexecute with the borrower during the loan modification process thatallows the firm to communicate directly with the HOA, Sperlongaexplained. Sperlonga then monitors monthly payments andnotifies the servicer if the borrower misses a payment, providing awarning to trigger servicer attention that a potential default islooming, the firm added.

“Essentially, Loss Mitigation Association Surveillance allowsfor greater communication between servicers and HOAs, which is whatthey both want,” Martin said, adding that HOAs and servicersfrequently lack basic contact information and do not know how tocommunicate with one another.

“This service helps associations get paid what is due them sothey can keep operating, while at the same time minimizing expensefor lenders and their servicers in pursuing either home retentionor re-marketing the property,” he said. “It helps avoid delays thatresult in excess inventory in the market, and that’s good foreveryone.”