Statement Issued on Loss Mitigation Strategies for Servicers of Residential Mortgages - Circulars

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Circular

Statement Issued on Loss Mitigation Strategies for Servicers of Residential Mortgages

September 4, 2007

Circular No. 11894

The federal financial regulatory agencies and the Conference of State Bank Supervisors (CSBS) have issued a statement encouraging federally regulated financial institutions and state-supervised entities that service securitized residential mortgages to review to determine the full extent of their authority under pooling and servicing agreements to identify borrowers at risk of default and pursue appropriate loss mitigation strategies designed to preserve homeownership.

Appropriate loss mitigation strategies may include, for example, loan modifications, deferral of payments, or a reduction of principal. In addition, institutions should consider referring appropriate borrowers to qualified homeownership counseling services that may be able to work with all parties to avoid unnecessary foreclosures.

See the Board’s press release for full details.

Press release

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