How Lenders Benefit from Flex Modification Plan
March 29, 2018
Flex Modification that was introduced as a long-term foreclosure prevention alternative has turned out to be a big boon for lenders. Simply put, it is a flexible way of helping more borrowers qualify for a loan modification when they find themselves trapped in unrelenting circumstances.
A loan modification is the last-ditch effort made by lenders to preserve their investment and help the borrower revive their past due loans by altering the terms of their original agreement. From extending the term of the loan to reducing the interest rate, the ultimate solution is to bring down the monthly payments.
Flex mod is everything that HAMP was not. As the name suggests, flex modification loans offer lenders greater resilience to assess borrowers in terms of their repayment capacity, as opposed to other loan modification programs that were more restrictive. The plan has been designed not only to suit the borrowers who can enjoy loan payments reduced to up to 20%, but also lenders who can restore the loan without foreclosing it.
Loan modification is inexpensive and takes lesser time to process which has obvious benefits for the lenders. Some of them are listed below:
Beneficial for Both Lenders and Borrowers
Lenders are better off revising the loan terms because foreclosures mean that much more paperwork and additional expenses. The lender that is already losing money due to non-payment would prefer to get borrowers back on track rather than using more resources trying to process foreclosures. In an event that mortgagors default on their payments for a specified period of time, lenders can educate them about loss mitigation options such as loan modification, explaining them the benefits and features. Flex mod meets buyers and lenders halfway making it valuable for all the stakeholders involved.
Transparency & Accuracy across Data Points
Since the implementation of Flex Mod as an alternative to HAMP and Streamlined Modification programs, lenders have looked for methods to perform calculations and tasks accurately. With Flex Mod automation software, it has become easier for the servicers to report effectively and in a compliance-friendly manner. The borrowers can now see the calculations at each step, giving borrowers a clear insight into their loan modification process and lenders a stronger grip on compliance.
An Affordable Option
The Flex Mod program makes the loan more affordable for the borrowers, reducing their chances of defaulting again significantly. Foreclosures and eviction is not only expensive for the lender, but also a distressful process for the debtors.
What makes Flex Mod so sustainable is the math behind the process. The monthly payments are reduced based on amortization of delinquent loan balance and extension of loan term to significantly reduce the due amount. The long-term approach prevents any disruption in the repayment plan by keeping the process simple.
The lenders can use technology to easily track and evaluate the long-term success of borrowers in repaying the loan after it has been modified successfully. The latest tools can help in complex calculations and also educate borrowers about their options. The key to Flex Mod success lies in borrower-friendly solutions, such as blogs, how-to videos, self-service channels etc., that will help them stay on top of their payments, thereby helping the servicers get paid without interruptions across the loan modification life cycle.
With the ever-evolving mortgage landscape, lenders have a lot on their plate. Partnering with experts like Expert Mortgage Assistance helps them stay focused and compliant. We have years of experience and proven success in controlling the loss mitigation time frames for Streamline Modification, HAMP, and Standard Modification. We can guarantee you similar success and loss mitigation workflows for Flex Mod as well. Feel free to discuss your requirements with our experts today.