High Tech Solutions: Technology is being used as a proactive tool to keep more properties from going into foreclosure.

Faced with an increasing number of foreclosures and potential losses, lenders and servicers are looking long and hard and which loss mitigation measure will work best to keep families in their homes.

There is a significant amount of loss if a lender has to take a property back. On average, lenders are losing $50,000 on each subprime loan that goes into foreclosure and $30,000 to $50,000 on loans in the prime market, according to Duke Olrich, founder, president and chief executive officer of DRI Management Systems in Newport Beach, Calif.

As a way to stop foreclosure from happening, lenders are now turning to scripted interviews where borrowers are taken through a special group of prescribed questions. The interview is kept short and to the point, lasting about 10-15 minutes, with time to counsel clients. "It helps the borrower get out of the bind they are in," said Mr. Olrich. "These interviews help create a solution."

For many borrowers, their monthly mortgage payments have marched away from them. Perhaps they started with a payment of $800 with a low interest rate. Close to the market, the adjustable rate mortgage does not have a low interest rate anymore, and the payment is $1200 a month. "This has happened especially in the North and Midwest where people have lost their jobs and plants are closing," he said. "For many people, their payments have been raised significantly. They have the income but can they cover the increase? I think the industry has been very progressive in the last five years. But now more attention is focused on finding solutions because of the potential losses."

Through scripted interviews, lenders and servicers work to determine the true intention of the borrower. Do they want to stay in the property or not? The biggest question every investor wants to know is, "What is their financial ability to pay on the loan?"

The borrower's information is pushed through an economic model, and the typical way many servicers go is to offer the borrower a payment plan, which varies in length. Payments are rearranged, and the fees, costs, and late charges are tallied. If the borrower owes $3,000, the plan might be made to pay $3,000 over a year-long period, Mr. Olrich said. This could mean paying $200 a month along with the regular payment.

If that money is not there, the lender may take out a forebearance plan and accept something less than what is owed in order to keep the loan in ...