Mortgage Servicers Prepare for Forbearance Exits
A webinar, “Servicing in a Post-Pandemic Era: Ensure You’re Prepared to Help Customers” was recently held. It was aimed to help mortgage loan servicers, how prepared they are and how the industry is readying itself for the impending wave of homeowners coming out of forbearance plans.
The Interim Editor-in-Chief for The Five Star Institute, Mr. David Wharton moderated the webinar. He was joined by Shawn Miller who is the Vice President, Head of Business Development for Xome, and the SVP of Default Servicing for Mr. Cooper, Mr. Ramie Word.
The webinar managed to cover various topics which includes; education, assistance, ad expedited alternatives for the disposition or sale of homes prior to foreclosure. It also discussed about programs and procedures that may help and assist homeowners through the procedure ending in a more dignified exit.
As previously reported by the Mortgage Bankers Association or MBA and other media outfit, there are about two million American homeowners who are currently in the forbearance plans. This week, the number of properties who are about to be foreclosed went down for the 15th straight week. It is now composed of just 4.16% of all the mortgage volume.
“This current housing market is much different than the great financial crisis,” Mr. Miller said. “Homeowners have more resources, support, and options—including historically low interest rates—providing the opportunity to reduce your loan and mortgage payments through a refinance,” he added.
Most of the mortgage loan servicers have been working hand-in-hand with the U.S. Government and various government regulators in order to guide these impacted homeowners through these new unchartered territories.
Just as the global health crisis hit the country with unprecedented circumstances never before faced or experienced, property owners who were affected and impacted financially through unexpected covid-19 pandemic-related job loss were able to seek refuge and relief in the fact that loan servicers were there for them to offer and give alternatives.
“We really had to act quickly to create products and offer guidance,” said Word. “We also had to shift our resources where we could better support the customer. For the last few years at Mr. Cooper, we have really grown our performing portfolio and really were not seeing the same delinquent transfers as we had years prior. We were able to partner with the GSEs [government-sponsored enterprises], the CFPB [Consumer Financial Protection Bureau], and the FHFA [Federal Housing Finance Authority] to make sure we had the right solutions in place for the customer, making them aware of these solutions.”
The industry has presented various options and selections to homeowners who are searching for relief. These include but not limited to the Standalone Partial Claim, the Owner-Occupant Modification, the Combo Partial Claim and Loan Modification, and the FHA Home Modification Program or HAMP. Despite the hardship and the struggles that servicers have to deal with, their number one priority is to keep the customer in their home, especially during this time of pandemic, Word noted.
Word also said that there is this huge misconception about servicers especially for people who are not in the business. This people will usually think that servicers are just out there to foreclose and get their property back. Word reiterated that he has to correct and deal with this negative impression day in and day out, and receiving customer calls on a weekly basis. “We know that is not the environment we are in. The number one priority is to keep the customer in the home. Being able to partner with the GSEs and CFPB speaks volumes to the differences between the financial crunch of 10-12 years ago to where we are at now. We are able to have a dialogue and get answers to grey area questions, so we are all marching down the same path together,” He further added.
The focus then changed to the future and what lies ahead as the deadline of the foreclosure ban is coming to an end very soon.
Miller said that as an industry, they can find the way through these hard times if they only work together, while putting the interest of the homeowners at heart.
The country’s economy have started to rebound and is continuing to gain momentum, and with that positive trend, mortgage loan servicers are finding more and more homeowners leaving forbearance plans, resuming with their payments and some even managed to update their payments. The latest report from the U.S. Department of Labor said that the advance figure for seasonally adjusted initial unemployment claims was at 376,000, down by 9,000 from the previous week’s number of 385,000. This is the lowest level for initial claims since March 14 2020 when it was at 256,000.
Word also said that as some of these programs are starting to end, they do not want to lose sight of any available alternatives or viable options that they can extend to their customers just to keep them in their home. “We will keep a heavy focus on digital, giving the customer the ability to self-serve, and also have the support here if they need us,” he said.
One of the spin-offs of this global health problem is that a lot of loan servicers were force to change and/or pivot or shift their assets to other areas and train their employees on the other aspects of the real estate industry. They were able to retrain and diversify their people which became a plus for most firms as they now have a team of workforce who could pivot and transition to other roles and fill the gaps where it is needed once the eviction moratorium ends, allowing them to handle an impending huge influx of volume.
“We have the ability to flex team members and move them from the more default servicing-oriented businesses to support more of our origination-oriented businesses,” said Miller. “They have been helping with the large volume on the origination side, and it’s great for those employees from a career perspective as they learn more about the entire mortgage ecosystem as a whole.”