4 Takeaways From Mortgage Servicing Industry’s Top Legal Forum

Last week, I attended one of the mortgage industry’s top legal forums, hosted by USFN, an org for America’s mortgage banking attorneys to collaborate on a consistent approach to servicing as market and regulatory volatility both grow in this cycle. The show detailed lots of today’s challenges across loss mitigation, foreclosure, bankruptcy, eviction and property preservation, and liquidation. Throughout these processes, our Sagent team works to keep servicers efficient and safe, and I left the USFN show with 4 key takeaways on these topics.

 1. Delinquencies Are Rising and Foreclosures May Follow Soon

Most default attorneys noted that they’re seeing an increase in delinquencies and defaults, and the primary reasons are escrow shortage shock from insurance and property tax increases, and current market and economic uncertainty.  

Many discussed the recent Federal Reserve Bank of NY Quarterly Report on Household Debt and Credit and the rise of non-housing debt as an extra source of consumer strain.

For example, from pre-pandemic 4Q 2019 to 4Q 2024, student loan, credit card, and auto loan debt rose $100 billion (6.6%), $280 billion (30%), and $330 billion (24.8%), respectively.

Also, several default servicing attorneys noted an increase in short sale inquiries in an environment where Covid protections are wearing off and modification may not provide relief.

This results in a growing expectation that foreclosure filings may rise in the near future.

This results in a growing expectation that foreclosure filings may rise in the near future.

2. Why Compliance Culture Prevails Amidst Federal Deregulation

There was a significant amount of discussion about the uncertain future of CFPB enforcement and the end of the Chevron Doctrine and judicial deference to reasonable administrative agency interpretation of enabling legislation and regulations.

As such, attorneys and servicers alike agree that as long as mortgage servicing laws and regs are on the books, they will be followed.

This is a pragmatic approach to Federal law, and critically, it also acknowledges that states will continue to step in where the federal government leaves gaps.

Servicers know from past experience that many state regulatory bodies have concurrent jurisdiction to enforce RESPA, TILA, and other mortgage-centric federal laws, in addition to more stringent home-grown state law requirements.

Additionally, foreclosure and eviction are state law-driven areas of practice, and bankruptcy, while a federal statutory scheme, has always had significant local rules overlays and approaches.

No matter the shake-ups on Capitol Hill, it’s business as usual in default servicing compliance and attorney firms, and their servicer clients are ready.

No matter the shake-ups on Capitol Hill, it’s business as usual in default servicing compliance and attorney firms, and their servicer clients are ready.

3. How Sagent Helps Servicers & Attorneys Manage Homeowner Hardships

The Dara Default suite is a powerful tool designed to support all elements of the default servicing life cycle from early delinquency through asset liquidation. Here’s how:

• Loss Mitigation capabilities include the closest thing to an electronic modification that I have ever seen (and we’re really proud of this!), with frictionless intake, automated decision waterfalls, QA/QC, document generation, remote online notarization, and e-signature. Yes, the future is now for borrowers in distress and we also have customizable mobile-first capability in the Dara Consumer suite that assists in managing hardship.

• The overall Dara Default suite is harnessing automated workflow and milestone mapping for foreclosure and bankruptcy, attorney network integrations and collections and claims functionality. Certain aspects of Dara AI also enhance the offerings in this area with OCR, data extraction, data correlation, and automation. Dara Data will also allow more sophisticated analytics for default portfolios and case loads alike.
• Sagent is ready to meet the mortgage industry, and the current market, at this crossroads.

The Dara Default suite is a powerful tool designed to support all elements of the default servicing life cycle from early delinquency through asset liquidation.

4. How To Join Sagent’s Attorney Network & Attend Our May 5-7 Conference

Sagent has a limited number of spots available for default attorney network firms to participate in beta testing for Dara Default.

Subject to certain requirements (including the execution of a non-disclosure and confidentiality agreement), your firm could be part of the group that is testing and evaluating our functionality and providing feedback for final refinements.

We want to be a platform that serves both servicers and the attorneys who provide crucial legal services in default case management. If you are interested, please contact JoAnn Goldman for more details. But do it soon! Those spaces are filling up fast!

Sagent also has a limited number of spots available at its annual customer conference Ignite, which will be held May 5-7 in Dallas, Texas.

This is the first year ever for default attorney network attendance and learning tracks which will include product demos, one-on-one time with servicing clients, and a VERY impressive executive panel featuring some of the heaviest-hitting CEOs in the space (marketing will kill me for giving away any more than that!). If you would like to claim your seat for Ignite, please register here. Those reservations are going quickly as well!

Cynthia Treadwell is General Counsel at Sagent.