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Ways for Servicers to Manage COVID-induced Delinquencies

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The ongoing coronavirus pandemic is posing a significant challenge. Experts are not in a position to quantify or project the delinquency numbers, as per a recent report in Black Knight’s Mortgage Monitor.

“Trying to gauge the impact of COVID-19 on mortgage performance is as much an art right now as a science,” said Ben Graboske, president of Black Knight Data Analytics. “The fact is that there is no true point of comparison in the nation’s recent history for analysts to model against.”

In a recent article on Scotsman guide, the author has linked this to the great recession, where the unemployment rate catapulted from 4.5% in 2006 to 10% in 2009 and the number of mortgages past due tripled in four years. That’s right about where the jobless rate should be now; with over 10 million people filing for unemployment since the coronavirus was officially dubbed a pandemic on March 11, unemployment should be hovering roughly around 9.5%.

With the recession as a point of comparison, researchers have estimated that we can expect some 2 million new mortgage delinquencies. Add that to the current total and you get 4 million delinquencies, a national non-current rate of 7.5%.

In the same article, Frank Nothaft, chief economist for CoreLogic is much more positive and notes that widespread foreclosures “will likely be averted,” in part because of the home equity buffer many homeowners currently enjoy. A CoreLogic report estimated that homeowners carrying mortgages also had an average of $177,000 in home equity at the start of 2020.

This brings into focus the forbearance programs put in place via the recent CARES Act. While the mortgage industry is advocating for more liquidity, their demands have so far gone unheeded. Ginnie Mae has come up with some creative ways to help with the liquidity.

In the current scenario, servicers will still need to pay principal and interest advances to federally backed securities holders, even if borrowers are granted deferments on paying their mortgages.

The delinquency rate was at its lowest in Feb 2020. This means that default servicing staff across the industry has seen a large decrease in recent years That’s clearly bad news for servicers as they navigate the rising tide of forbearance and deferral requests that are expected to grow very quickly.

At PrivoCorp, we have put a program in place to support our servicing clients with the default and the forbearance program. In case you are seeking some assistance, please reach out to us at

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