With the COVID-19 pandemic severely hurting the economy and unemployment levels skyrocketing, many homeowners are struggling to keep up with their mortgage payments. To help alleviate the impact of COVID-19, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to grant relief options for federally backed loans.
Post the Act, there has been a tremendous rise in the number of forbearance requests with around 4.3 million mortgages in forbearance, representing 8.53% of the total outstanding mortgages. The high rate of unemployment and the wave of layoffs have also meant that delinquencies among borrowers for past-due mortgages have soared majorly. Mortgage delinquencies spiked by 1.6 million in April, the largest single-month jump in history, according to Black Knight, a mortgage technology and data provider.
As the pandemic continues, more borrowers are experiencing increased financial hardships resulting in default in mortgages. This has meant that servicers, who were already swamped with varied requests, are required to provide additional relief outside the forbearances provided for in the current legislation. As call volumes have increased, servicers are going through tremendous pressure with hold-times jumping from two minutes to a whopping 17.5 minutes each, and call abandonment rates up to 25%.
The continued uncertainty surrounding the pace of recovery has meant that servicers are being forced to rethink their default servicing operations to lessen the risks to their own business.
To deal with the situation, servicers are offering loss mitigation or loan modification options to borrowers. In order to be eligible for a loan modification, borrowers are required to show that they cannot make the current mortgage payments, demonstrate that they can afford the new payment amount by completing a trial period, and provide all required documentation to the lender. All of this has meant additional paperwork.
This is also the time when lenders and servicers in most countries are working with limited staff. In this scenario, the additional paperwork has to pass through several hands and this is proving to be a herculean task. Servicers are also trying to engage productively with borrowers – who are confused and panicked — to allay their fears and put them at ease.
All in all, the impact of rising forbearance, loan modifications and mortgage defaults are proving to be extremely tough for underprepared servicers. Trying to scale up large scale loss mitigation initiatives is leading to mounting administrative costs and slower cycle times, negatively impacting borrower experience.
One way to deal with all this pressure is to partner with platform-based services providers. This is where companies like PrivoCorp can help with their extensive domain and technology capabilities. PrivoCorp can strategically help servicers to strengthen their default servicing operations and manage the significantly higher loss mitigation volumes.
PrivoCorp can provide support by:
- Offering expert assistance with the loan modification process and delivering an improved experience to borrowers.
- Helping servicers establish streamlined workflows to efficiently meet the rising volume of loan modification demands through standardized processes and project-suited resources.
- Providing an expert team of loan modification professionals and access to advanced technology-oriented tools.
- Deploying and executing strategically planned loan modification processes by powering servicers’ existing system.
- Enabling servicers through a broad spectrum of mortgage loan modification support services aimed at efficiently discharging end-to-end loan modification requests.
- Streamlining servicer’s default and loss mitigation operations by engaging effectively with borrowers identified in default.
- Offering end-to-end back-office activities associated with default and loss mitigation through a wide array of mortgage default management tasks, including collections, claims management, counseling, etc.
- Empowering servicers through a smartly designed Mailbox Monitoring System that can help them manage forbearance and other default-related requests with a high level of quality and consistency. The Mailbox Monitoring System ensures that every request coming in is allocated to the relevant processor, in time, and SLAs for response are defined clearly.
The COVID-19 pandemic has given rise to unforeseen and intimidating challenges for servicers. However, partnering with expert Platform-based Services & solutions providers like PrivoCorp is a great solution to support their loss mitigation efforts and adjust to the new normal. To connect further with PrivoCorp, you can get in touch at firstname.lastname@example.org