When There is Danger in Settlement Negotiations (Servicing‪)‬

Is it actually possible that lenders and servicers are exposed to peril if they elect to pursue settlement of delinquent mortgage accounts? Perhaps surprisingly, the answer is "yes"--although examination of the danger offers a roadmap to avoid it. First, we observe what is manifest in the mortgage industry--settling cases is the preferred path. Long before "subprime crisis" entered the lexicon of everyday America, servicers had created loss-mitigation departments to find alternatives to foreclosure. That these approaches may have become more difficult in the subprime era is not the point. The goal of servicers in this regard remains the same.