By Scott Kersnar

More and more borrowers are looking to do everything from applying for a loan to modifying a loan online.

These days consumers turn to the Web to find a mortgage as easily as sports fans "Google it" to find out who really won a batting championship in a particular year. And if they don't see what they want at first glance, they can click away and look at the next site.

The discipline that makes all successful mortgage websites resemble one another is consumer expectation. If Expedia.com does it, a successful mortgage website has to do the same. That means, first of all, that you have to add value within seconds if you want to hold a loan seeker's attention.

WEBSITES FOR LOAN MODS
Internet technology — enhanced by open-source development and stronger security practices — has become mature and reliable. The educational value of the Internet has been proven. So how is the mortgage industry doing with harnessing Web technology to help with loan modifications?

Certainly there have been some false starts. Hiring a bunch of idle loan officers and launching a website to troll for defaulting borrowers willing to put up $3,500 to have you negotiate with their servicer hasn't worked well. Neither has deploying a lengthy online questionnaire out there in cyberspace where stressed borrowers have to deliver a lot of information before their servicer deigns to speak with them.

At this writing the Obama administration was reporting that servicers had only converted 31,382 MHA modifications to a permanent basis. However, lender appetite for harnessing proven tools and taking vigorous action on the loan modification front has been feeble for good reason. First American CoreLogic pegs the cost of bailing out underwater homeowners and giving them a 5% stake in their homes at $858 billion. Moreover, many REO holders hope that rising real estate prices in some markets mean languishing real estate values are on the upswing. Nevertheless, Credit Suisse has calculated that we face $300 billion of alt-A and option-ARM resets by summer and another $700 billion of the same by summer 2011. That alone suggests that we need to handle loan modification on a massive scale, which inevitably means turning to Internet technology.

"The industry is failing with the HAMP system because servicers don't have the ability to deploy analytics and documents quickly," said Mortgage Cadence executive vice president Brad Thompson. "They need to be able to say this bucket of loans will receive a solicitation because they qualify for a loan mod but don't know it, and this bucket is already in default and won't qualify." A huge roadblock he notes is that permanent loan modifications are, in effect, refinance loans. "Servicing platforms are not equipped to deal with activities normally tasked to the origination space," he said.

So, right now service providers such as ISGN, Heart Financial Services, Wingspan Portfolio Advisors, Urban Settlement Services and a number of others are stepping up to provide the required technology and process management systems portfolio lenders and servicers lack. "Based on ISGN's experience facilitating loan modifications for some of the top five servicers in the country," said Chetan Patel, executive vice president for ISGN, "we've found that much of servicers' backlog is the result of borrowers needing information, but only having access to that information through live phone contact with a borrower representative. By providing borrower-facing websites that educate on the processes involved in a loan mod, as well as how a loan mod will impact their credit. These websites should also provide an interactive way for individuals to initiate the loan modification process, learn which documentation is needed, and submit documents online.

"An interactive direct-to-consumer website will also help to get more individuals started in the loan modification process," he added, "because it offers an indirect method of contacting the lender or servicer. Many individuals avoid contacting their lenders or servicers out of reluctance or shame of their situations. Those people would have a way to find out information and start the process without having to make any phone calls, which is particularly helpful for those who are working in environments where privacy is compromised, or those who can't call during work hours."

"A servicer's website should contain easy access — meaning no shielding by a SSL login — to basic information about potential help, such as explanations of home retention options, form documents and generally accepted time frames for response," said Jerry Alt, president of Heart Financial Services. "Most servicers do not seem interested in sharing expectations up front, leaving their customers dissatisfied when they finally talk to a customer service representative and then don't receive what they perceive to be a prompt follow up or end up being transferred to another queue to wait for assistance." He said the biggest issue with a website is the depth to which the person must browse to find useful information. "Put important links right on the front page, direct them to explanatory videos when appropriate, and something as simple as 'help is three clicks away' will set the user's expectations properly so they don't give up their search. The other benefit of using a secure website is the ability to direct the borrower to self help."