Maryland Wants to Go Paperless on Foreclosure Mediation

February 24, 2012

The technology behind the initiative is a new "foreclosure mediation portal" within the Hope LoanPort and is scheduled to launch by the end of the first quarter of 2012, according to Faith Schwartz, executive director of the Hope Now Alliance, who spoke on a panel during the Mortgage Bankers Association's servicing conference this week.

Maryland's Office of Administrative Hearings is working with the nonprofit technology provider Hope LoanPort and GMAC Mortgage/Residential Capital Corp. is helping to fund the initiative.

Since Maryland instituted its mediation program in July 2010 -- which requires servicers to meet face-to-face with borrowers in a last-chance opportunity for loss mitigation prior to foreclosure -- participants were required to submit paper copies of documentation to the state office. While well intentioned, the requirement led to the same lost document and organizational issues that plagued the industry prior to servicers' use of Hope LoanPort, explained Bradley Blower, general counsel for Hope LoanPort.

With the new program, all documentation will be handled electronically and all participants, including foreclosure and borrower attorneys, housing counselors and state officials, can access pertinent data and information. When a borrower and servicer can come to terms on a resolution, that information is entered into the system electronically and borrowers and servicers use signature pads to capture electronic signatures.

Everybody will be on the same page and servicers won't have to come to meetings with "a bag full of documents," which will make the process more effective, Blower said during the panel.

Hope LoanPort is a customized and private-labeled version of the IndiSoft RxOffice suite of default servicing technologies. Approximately 750 housing counseling agencies and 14 of the nation's largest servicers use the Web-based application in order to collect, submit and store loss mitigation documents for distressed borrowers going through the mitigation process.

The organization that manages the technology was created out of the Hope Now Alliance and was later spun off into its own nonprofit.

Blower believes the Maryland program could serve as a model for other state mediation programs and he added that discussions about national servicing standards, as well as preliminary information from the multistate attorneys general settlement with servicers includes requirements for technology to allow borrowers to check on their loan modification status.

Dana Dillard, a senior vice president at GMAC ResCap, said that of the 450 mediations that GMAC schedules each month across the country, only about 30% of the meetings actually occur because of a variety of issues, including borrower paperwork and whether the borrower even shows up to the meeting.

Dillard said the company is supporting the Maryland initiative because it will help servicers better adhere to mediation requirements and more quickly find resolutions for borrowers because they will have borrower documents and can come to the table prepared to take action.

"We'd love to have a package from the mortgagor and attorney 15 days prior to meeting and we can come to the table with a graceful exit strategy and a best offer for a workout,” she said during the panel, adding, “But we're not there yet."