RC_LA_DA_301.4 Math for Loss Mitigation

Financial calculations play a critical role in evaluating borrower situations and determining appropriate loss mitigation solutions. These calculations help assess a borrower’s ability to continue making payments and guide the selection of the most suitable option. While technology is often used to perform these calculations, it is important to understand how they are derived, what they represent, and how they inform decision-making.

Math for Loss Mitigation examines the key financial calculations used in loss mitigation. The course begins with a review of the monthly mortgage payment and its components. It then explores key indicators of default risk, including the loan-to-value ratio and borrower equity, as well as housing-to-income and debt-to-income ratios. The course concludes with a discussion of the budget ratio and residual income, and how these measures are used to evaluate a borrower’s capacity to qualify for available loss mitigation options.

This is a single-family/residential course.

Topics:

• The Mortgage Payment
• The Loan-to-Value Ratio and Borrower Equity
• Housing-to-Income and Debt-to-Income Ratios
• The Budget Ratio and Residual Income

Seat time approximately 30 minutes.

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