Pursue loss mitigation options with borrowers during bankruptcy

As homeowners struggle with the turbulent housing and financial markets, please remember that Servicers must continue to pursue loss mitigation options with a delinquent borrower even when notice is received of a bankruptcy filing.  Communicating the availability of loss mitigation options to the borrower’s counsel should be part of your bankruptcy monitoring process.  

A bankruptcy filing offers you the unique opportunity to learn about the borrower’s financial condition, which in turn can further assist you in analyzing the borrower’s qualification for certain loss mitigation options.  Taking a proactive approach in offering up loss mitigation solutions when the borrower is in bankruptcy is beneficial to both you and the borrower, as it can preserve homeownership while preventing future losses by bringing the mortgage current. 

Servicers should consult with their legal counsel regarding the communication of appropriate loss mitigation options available to a borrower who has filed for bankruptcy.