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Borrower-facing version of loss mitigation tool makes it easier for CUSO to reach distressed homeowners GRAND RAPIDS, Mich. – July 28, 2025 – WaterfallCalc, a provider of automated loss mitigation tools for mortgage servicers, today announced that The Servion Group has implemented WaterfallCalc+, the borrower-facing version of its popular loss mitigation analysis tool. A credit union service organization that services about 60,000 loans, Servion’s implementation of WaterfallCalc+ comes as many mortgage servicers begin preparing for new FHA loss mitigation rules that take effect in October. Servion has been a WaterfallCalc client since 2022. The CUSO chose WaterfallCalc+ to better reach distressed homeowners and make it easier for them to get help with their mortgages. With WaterfallCalc+, homeowners can securely apply for loss mitigation assistance through their phone, tablet or PC, making it more convenient to access relief on their own schedule. WaterfallCalc+ dynamically adapts to each loan’s investor or insurer—including FHA, Fannie Mae, Freddie Mac, VA or USDA—and guides borrowers through the application process in a compliant, user-friendly interface. The tool enables servicers to modernize their loss mitigation workflows and easily navigate changes in reporting, documentation and borrower communication requirements. “With new FHA rules going into effect this fall, it was the right time to upgrade,” said Andrea Larson, servicing manager at The Servion Group. “WaterfallCalc+ gives us everything we need to stay compliant, but more importantly, it gives borrowers a faster and more convenient way to get help when they need it most.” “Like many servicing organizations, Servion recognized that the old way of managing loss mitigation—mailing documents, chasing responses by phone—just isn’t sustainable,” said Donna Schmidt, founder of WaterfallCalc. “By adding WaterfallCalc+, they’re giving borrowers a much easier way to ask for help, and giving their team a more efficient way to deliver it.” WaterfallCalc’s flagship application gives mortgage servicers an affordable way to calculate the appropriate loss mitigation option based on insurer and agency requirements while eliminating cumbersome manual processes. WaterfallCalc+ integrates directly with the WaterfallCalc platform, enabling a seamless workflow from borrower application to decisioning. Servicers can invite individual borrowers or a group of borrowers to use WaterfallCalc+, where they can safely log in and communicate with the servicer in an easy, transparent manner. After a borrower’s options are identified, servicers can manage the entire loss mitigation process—from ordering title reports to creating modification and subordinate mortgage documents to preparing FHA incentive claims. Click here to view as a Word document   About WaterfallCalc WaterfallCalc is a leading provider of loss mitigation analysis technology for small and mid-sized mortgage servicers. The company’s affordable, easy-to-use solutions enable servicers to streamline their default processes and stay compliant by quickly and accurately calculating the best loss mitigation options for distressed borrowers. WaterfallCalc’s cloud-based technology, WaterfallCalc+, enables servicers to help borrowers who apply for assistance directly from their mobile device, tablet or PC while tracking the loss mitigation process. The company’s solutions are integrated with Fannie Mae’s Servicing Management Default Underwriter and Freddie Mac’s Resolve. WaterfallCalc is based in Grand Rapids, Michigan. For more information, visit www.WaterfallCalc.com. About The Servion Group Based in the Twin Cities, The Servion Group was founded in 1987 by three Minnesota credit unions wanting to offer competitive mortgage products. Today, we are co-owned by 53 credit unions and support nearly 500 credit unions and community banks across the country via solutions spanning mortgage, title, realty, financial advisory, and business lending, delivered through a staff of more than 270 employees. For more information visit www.MyServion.com.

Change is finally coming to some of the most burdensome aspects of mortgage servicing. In its latest issue, MortgagePoint covered how the FHA’s newly revised servicing rules are shaking up requirements for engaging with distressed borrowers — and the results look promising for both servicers and homeowners. The updated guidance, laid out in Mortgagee Letter 2025-14, clarifies borrower contact requirements that had previously created unnecessary compliance pitfalls. By streamlining when and how servicers must reach out, FHA is giving mortgage companies more practical pathways to help borrowers avoid foreclosure — without compromising key protections. As MortgagePoint highlighted, this is especially critical for small and mid-sized servicers managing borrowers across multiple time zones and diverse markets. Earlier drafts of the rule included rigid requirements that could have forced servicers into awkward or nearly impossible scheduling windows, adding compliance risk without real borrower benefit. I was quoted on why this update matters: “The revised rule is vastly better than the first draft. The rule mostly achieves the same results without overburdening the process. Specific requirements which would have proven extremely difficult to small servicers with geographically diverse portfolios have been removed. These include requiring that contact attempts be made during certain times of the day and requiring meetings during working hours within a property’s time zone. Mortgage servicers and borrowers alike will both benefit from the new approach, and more successful outcomes can be expected.” At DLS Servicing, we’re already seeing how our clients are planning ahead under this new, more flexible framework. Many are leveraging the versatile scheduling component within WaterfallCalc+ to easily set up FHA loss mitigation interviews — taking advantage of the regulatory breathing room while keeping borrower communications proactive and well documented. Ultimately, this is a meaningful shift that helps servicers stay focused on real borrower solutions, not just checking boxes. The result? Stronger relationships, fewer unnecessary hurdles, and hopefully more families staying in their homes. If your servicing team wants to explore how these new rules impact your operations — or how WaterfallCalc+ can simplify scheduling and compliance — we’re here to help. Let’s talk. Read the whole article here, starting on page 48.

Volatility isn’t new to the mortgage industry—but the flavor of it in today’s market feels different. As Bonnie Sinnock captures so well in her recent National Mortgage News article, “Mortgage pros share tips for riding out volatility,” this moment is defined less by predictable economic swings and more by a constant drumbeat of global headlines, policy shifts, and sudden changes in borrower behavior. What’s encouraging is that across the industry, leaders are sharing how they’re staying adaptive—whether it’s by hedging interest rate exposure, diversifying secondary market outlets, or preparing for shifts in MSR recapture. These are smart, strategic responses to an unpredictable time. But one area I think deserves special attention is how we approach regulatory change. At DLS Servicing, we’ve worked with many servicers who feel paralyzed by the ambiguity that often comes with proposed or anticipated guidance—especially from agencies like the CFPB or VA. The instinct to “get ahead” of new rules before they’re finalized is understandable. But it can also backfire. That’s why I shared this perspective in the article: “You need to keep honoring the spirit of existing rules. That’s how we got through the 1980s, the 1990s, and the housing crisis—and that’s how we’ll get through it now.” It’s tempting to chase every emerging headline. But what borrowers need, and what regulators respect, is consistent, responsible servicing based on clear, current guidance. The noise will always be there. But the firms who remain focused on doing the right thing—not just the newest thing—are the ones that endure. Bonnie’s article is full of solid insight from leaders across the industry. I was glad to contribute and even more glad to see the diversity of approaches being taken to navigate today’s complexity. The storm may not be ending tomorrow—but there are plenty of us who know how to steer through it. Click here to read the full article.

In an article by Bonnie Sinnock for National Mortgage News, titled “FHA tweaks updates to loss mit options, ‘face-to-face’ rule,” the FHA announced meaningful revisions to its loss mitigation and borrower contact requirements—revisions that, in our view, finally reflect the operational realities of today’s mortgage servicing landscape. The update rolls back time-zone-specific availability requirements and instead embraces a more flexible, cost-effective approach for engaging with distressed borrowers. That’s a welcome shift—especially for smaller servicers working across diverse geographies. DLS Servicing CEO, Donna Schmidt, was quoted in the article, applauding the changes as “a significant improvement over the first draft.” She noted that the new guidance strikes a better balance between compliance and compassion—preserving the spirit of borrower support without getting lost in red tape. While there’s still work to be done to bring full alignment across agencies, this move by FHA sets a new tone: one that’s workable, thoughtful, and better suited to the realities we face in the field. We encourage our partners and peers to review the final rule closely and prepare for implementation—because when the rules improve, outcomes can too. Check out the original article in National Mortgage News here.

A new article by The Mortgage Point’s Erick C. Peck—“Bill Aims to Revive VASP Program for Vets Facing Foreclosure”—sheds light on a critical piece of legislation that could reshape the future of loss mitigation for veteran homeowners. The article covers the introduction of the Veterans Housing Stability Act, a bipartisan bill led by Senators Lisa Blunt Rochester and Mike Rounds that seeks to reinstate a partial claim program through the Department of Veterans Affairs (VA). The timing couldn’t be more urgent: the VA’s controversial VASP program ended on May 1, 2025, leaving more than 70,000 veteran borrowers in serious delinquency with limited options to avoid foreclosure. The new legislation aims to create a more stable and effective path forward—one that mirrors the loss mitigation solutions already available to borrowers with FHA and USDA loans. It would allow the VA to acquire arrearages, place them into a separate lien, and give veterans a fighting chance to stay in their homes. Our own Donna Schmidt, CEO of DLS Servicing, was quoted in the article, emphasizing the importance of swift congressional action:“This needs to pass as soon as possible. The House has already unanimously passed a similar bill, and the Senate must do the same. Our veterans deserve our prompt replacement of the overly expensive and difficult to complete VASP program.” At DLS, we see firsthand the gaps in the system—and how they disproportionately impact veterans. For years, we’ve supported calls for a streamlined, fair, and consistent loss mitigation solution that doesn’t force servicers to choose between doing the right thing and assuming unreasonable risk. This bill could be the fix that’s long overdue. We’re encouraged to see growing awareness in Washington and coverage like this from The Mortgage Point—and we’ll continue advocating for the tools servicers need to support those who’ve served us. Click here to read the original article.

The Veterans Administration continues to resist modernizing its approach to loss mitigation, failing to update policies to reflect current market realities. This has been a persistent issue for decades. Ironically, the group most deserving of our nation’s support—veterans—consistently receives the least. This cannot be allowed to continue. Last week, the VA abruptly announced the wind-down of the Veterans Assistance Servicing Purchase (VASP) program, giving mortgage servicers and veteran borrowers just six days’ notice. VASP was the only program that guaranteed a reduction in monthly principal and interest payments for struggling veterans. Now, it’s being withdrawn without any viable alternative. This paper provides a brief overview of the long-standing neglect that veterans have faced in mortgage servicing. Over the decades, the federal government has developed several mortgage programs backed by guarantees or insurance to promote homeownership. The Federal Housing Administration (FHA) offers an insurance program where borrowers pay a monthly premium that protects lenders against losses in the event of default and foreclosure. FHA loans are designed to expand access to homeownership by allowing for lower down payments and more flexible credit qualifications, particularly benefiting first-time buyers and low or moderate-income households. The U.S. Department of Agriculture’s Rural Housing Service (USDA RHS) provides a partial guaranty to lenders, incentivizing mortgage lending in rural areas where property values tend to be less stable than in suburban markets. The Veterans Administration (VA) also guarantees home loans, enabling veterans—many of whom may have limited credit histories or lack the ability to save for a traditional down payment after years of service—to access home financing. The primary source of funding for government-backed loans is the Government National Mortgage Association (GNMA), which creates investment vehicles allowing investors to buy into a pool of loans. These loan pools generally share similar interest rates and repayment terms. CASE STUDY 1 In 2017, the southeastern United States and Puerto Rico were hit by three major hurricanes – Harvey, Irma and Maria. The hurricanes caused widespread devastation to homes, apartments and businesses. In response, the VA, along with FHA and USDA implemented forbearance plans, allowing borrowers to temporarily suspend their mortgage payments while they navigated the challenges of repairing their properties and returning to work. However, unlike their counterparts, VA only offered a modification to reinstate the default. By January 2019, many of these loans were exiting forbearance. At that time, the modification interest rate was hovering around 5%. In contrast, the average mortgage rate over the five years prior to the hurricanes was 4.04%, with some borrowers paying even lower rates by purchasing discount points at closing or choosing 15-year repayment terms. As a result, many VA borrowers faced significant increases in their monthly mortgage payments, despite having done nothing to cause their financial hardship. This shift to higher rates put an undue burden on veterans, many of whom were already struggling to recover from the devastation of the hurricanes. DLS Servicing encouraged VA to adopt a Partial Claim program modeled after FHA’s which has been proven successful since its introduction in 1996. FHA’sPartial Claim program was a result of necessity. In the early 1990s – the maximum monthly payment that would be approved was for a total of principal, interest and escrow that did not exceed 28% of a borrower’s gross monthly income (front end debt ratio). This left plenty of monthly income to establish repayment plans to recover from a potential default due to a natural disaster, excessive obligations or a temporary loss of income. But as time went on, the standards for qualifying for a mortgage became less restrictive and front-end debt ratios climbed more than 50%. So, while a borrower could resume making their monthly payments, they had insufficient surplus income to perform well under the traditional repayment plan. FHA recognized the need to expand the loss mitigation offering of allowing a claim against their insurance to bring a loan current, as opposed to forcing the loan to foreclosure, where their insurance payout would be much more significant. The strategic shift proved effective. While some borrowers still ended up in foreclosure, many recovered from their delinquency and successfully repaid their mortgages. The partial claim creates a secondary subordinate lien on the property in the form of a new mortgage payable to FHA; the funds are due when the first mortgage is paid in full and at a zero percent interest rate. The terms of the underlying mortgage remained the same. This allowed borrowers who enjoyed historically low rates to maintain them. Over the years, FHA has tweaked and modified how the partial claim is calculated and applied, including an option to offer a modification with principal deferment to lower the payment for a struggling borrower. USDA followed suit, creating the Mortgage Recovery Advance during the 2008–2012 housing crisis. Like FHA’s program, it was later enhanced to include modifications and principal reductions in response to changing economic conditions. In contrast, the VA offered programs that were optional to mortgage servicers but were structured in ways that would lead to significant losses or increased risks to the servicer. A servicer would hesitate to approve a loan for such programs because a shift in the market could increase their affected volume and lead to financial instability for the servicer, so most avoided the optional “creative” programs. This left veteran borrowers with no comparable loss mitigation program. CASE STUDY 2 During the COVID-19 pandemic, the federal government directed FHA, VA, and USDA RHS to implement streamlined loss mitigation options to help homeowners recover from forbearances granted under the CARES Act. A core element of these options was the use of a partial claim to cover missed payments and bring loans current. VA did issue a partial claim program that was extremely successful, though it had a few administrative bumps. In addition, the VA Refund Modification used a partial claim that reinstated the loan and provided additional payment relief by including principal in the claim and then re-amortizing the remaining unpaid balance over a new thirty-year term, with a …

Attention Servicers: The VASP Readiness Testing window is officially open! If your organization has already downloaded the VASP Servicing Transfer Readiness Package, it is time to take the next step in ensuring your systems are ready for the VASP process. Testing Window Details: Open Testing Period: November 18, 2024 – December 6, 2024 You can submit a Master Boarding File test during the testing window to confirm your readiness. To get started, download the VASP Servicing Transfer Readiness Instruction Package from the link below: www.vrmco.com/vasp-testing/ Additional Resources: For further details about the VASP program, including answers to common questions, check out the VASP Program FAQs: VA VASP FAQs