NovaStar Stems Losses with Job Training.

Kansas City, MO -- NovaStar Mortgage has taken a unique approach to loss mitigation that is designed to help keep more troubled borrowers in their homes.

The Kansas City-based subprime lender recently completed a pilot of LaunchPoint, a job placement and employment counseling program for borrowers who fall behind on mortgage payments.

Chris Miller, senior vice president of servicing, said the company's LaunchPoint placement and counseling services is proving to be a "highly effective" loss mitigation strategy.

"Through the end of July, we've placed more than 200 unemployed borrowers in jobs and successfully avoided foreclosure," he said in a news release.

Mr. Miller estimates that those 200 loan savers helped avoid more than $2.5 million in losses on mortgage loans totaling $17 million in principal. The total cost of the program is $400,000, he said.

On average, a foreclosure costs a lender up to $60,000 in lost interest, property management fees, legal bills and resale commissions. A weak real estate market in the area where properties are located and a lengthy sales process can exacerbate those losses.

Mr. Miller said the servicing industry as a whole has been slow to implement foreclosure avoidance strategies, but keeping customers in their homes makes good business sense.