Unifund Targets Indebted Homeowners with Lien Product.(Future Home Lien)

Looking for an alternative to foreclosure? Unifund, Cincinnati, has designed the "Future Home Lien" product to help collect debt from defaulted debtors who own a home. This unique product allows for a faster and less work-intensive litigation process when compared to foreclosures.

Unifund maintains that FHL products derive from unsecured, charged-off, non-mortgage, consumer accounts (typically bank card paper) that benefit primarily foreclosure attorneys, mortgage servicers, buyers of secondary market portfolios, nonperforming buyers and REO firms, as well as "brokers who can purchase a portfolio of FHL accounts for litigation-ready liquidation."

FHLs may serve these firms to "unlock a new revenue source" and expand their business.

FHLs are "geared for immediate litigation," according to the Unifund website, so even though FHL is not a mortgage paper, it indirectly benefits mortgage lenders by allowing homeowners who are in default to pay off their debt, clear their credit and avoid going into foreclosure.

FHL portfolio holders can pool the accounts by state, region or county, as well as based on outstanding balance, issuer or product type to customize it to the firm's needs. According to Unifund, benefits to a FHL holder include a "greater than 85% result in default judgments." Unifund guarantees each defaulted account in a FHL portfolio belongs to a homeowner and provides the appropriate documentation to back that claim up.

In addition, if the average default balance of a FHL account is anywhere between $4,000 and $5,000, in a foreclosure scenario the average outstanding balance is over $100,000. Also, Unifund allows FHL accounts to be purchased in pools that are liquidated in a "mass production" litigation method, while foreclosed accounts are purchased on a property-by-property basis.

According to Unifund, if the owner contests foreclosure proceedings leading to a longer work-intensive legal process, with FHLs, 90% of these homeowners either do not contest the defaulted account, or choose to voluntarily settle with the firm. ...