But on a basic level we wonder if all lenders know exactly what percentage of their mortgage book has had a loan modification on it, whether they actually collated all the relevant information to make the correct decision in the first place and whether they have a regular review process?
Unfortunately we have found some lenders have insufficient guidelines or quality controls in place to enable staff to make accurate judgement calls.
As a result some of those lenders are struggling to put together accurate data to identify what their loan modification exposure is.
Some lenders are no longer burying their heads in the sand and are implementing strategies to review their data and rebuild their decision-making processes.
We have recently been carrying out reviews of mortgage portfolios focussing on arrears and types of loan modifications for both holders and potential sellers of mortgage portfolios.
It seems to us that more lenders have started paying closer attention to the details of this subject at the moment in the knowledge that it is critical for them to analyse and understand the extent of their exposure to risk.