Staying positive in such a turbulent time for the mortgage industry can be difficult for mortgage professionals. However, Faith Schwartz, president of Housing Finance Strategies, believes we should all continue to be optimistic and that the industry will rise above the current obstacles that have presented themselves.
She was a guest on National Mortgage Professional Magazine’s Mortgage Leadership Outlook series, hosted by Andrew Berman, head of engagement and outreach for National Mortgage Professional Magazine.
Schwartz started the HOPE NOW alliance in 2007 and, together with her team, created events where servicers could set up desks to meet with borrowers while they were going through a horrible time. Though these conversations, borrowers even saw resolutions on the spot including loan modifications and forbearances.
“That was just one avenue because you know, we would send three million letters a month out to people who were starting to default and show they were 60 days past due,” said Schwartz. “We would combine our efforts with the government and the agencies and the servicers to have agreed upon solutions, so that when we were communicating with borrowers, they had kind of similarly suited outcomes, because they had a modification that was following similar rules.”
She said that the situations were rather complex because when they visited areas where consumers were hardest hit, they were kind of shocked that it was the first time borrowers had even seen their servicer or talked to them.
Schwartz said that what was important for her, is when you met borrowers how heartfelt the whole situation was and brought it home that there is a family behind every mortgage. Through her efforts and the efforts of her team at the time, they provided about eight million loan modifications to help folks avoid foreclosure.
As a long-time mortgage banker and mortgage professional, she loved the industry. However, after HOPE NOW, Schwartz’s outlook on the industry fundamentally changed. She wanted to improve the business for the consumer and all parties involved.
When asked what servicers and other mortgage professionals should be telling borrowers who are calling about their loans during the COVID-19 crisis, Schwartz responded first by saying everyone needs to take a breath and understand that solutions are on the way.
Processes being put into place for borrowers
The federal government has legislated that borrowers have a right to forbearance for up to six months or even a year with a federally-insured mortgage. Schwartz believes that it got ahead of itself a little bit, simply because the messaging, processing and how the mortgage servicers could work with their consumers was yet to be defined. While there were some processes in place, not all of them were updated to factor in the pandemic.
Today’s crisis differs from a decade ago because there is a shock in the system due to the massive unemployment numbers as a result of COVID-19. Schwartz believes there is a path forward to help borrowers get back on track. She also revealed that there will not be penalties, interest, late fees and bad credit associated with the solutions that are being discussed.
It’s not a complete break and borrowers still have to pay back what they will end up owing, however, it will help borrowers through one of their most difficult times in their life. In addition, Schwartz said from what she is hearing, there will be multiple options to figure out how they will repay what is owed on their loan. While these solutions may not be here by tomorrow, they are coming, she added.
Addressing servicer response time
In terms of servicer response time, Schwartz said that because of the 20-year-low on delinquencies, most operations do not have a high default and loss mitigation shop, unless it is a large firm that is used to dealing with those delinquencies.
She believes companies are not at fault as they did not have an excess number of servicers waiting for future defaults due to a booming market.
Still, some of these companies are now looking at their technology, opening their websites to offer intake and self-servicing to consumers, as well as opening portals to use in some of the call centers. The undeniable fact is that every servicer will be behind. Consumers should know that if they can’t get a hold of them immediately, they will be able to at some point. She added that Fannie Mae and Freddie Mac are still developing guidelines for servicers on what they need to be doing.
Best resources for mortgage LOs
When asked what the best resources are for mortgage professionals during this time, Schwartz said that you should always start with a federal site like HUD or the CFPB, which have Q&A sections for consumers. The next step would be to speak with servicers directly as these will help prevent you or consumers from falling into a scam that promises to help them make their payments. She warned against third parties.
Schwartz also encourages mortgage loan originators to keep working with folks. It is still a great time for borrowers to refinance their homes if it will save them money, due to record low rates. As a loan originator, she said, you may be helping someone save an extra $200 on a loan who may need it if they find themselves unemployed. She also believes it’s a great time for loan originators to step up and keep their borrowers informed.
As for liquidity issues, Schwartz says without being able to sell FHA or VA loans, or, without being able to help someone within those programs pay for their loans, those programs will inevitably stop. She added that Ginnie Mae has stepped up to help resolve some of the liquidity issues that have been coming up during the COVID-19 crisis.
Reassurance to loan originators
Schwartz believes this will pass, and loan originators should be sure that the loans they are making will be able to close. There may be some disruption in the mortgage market due to unemployment.
“The consumers should be at the center of every one of these discussions,” said Schwartz. “Because if you start losing sight of that, it makes for decisions that are probably not the best for everyone including the investors and lenders.”
In addition, Schwartz believes that technological advances through digital mortgages will help on both the origination and servicing side. She believes that everyone just needs to stay positive, and while there is an uphill battle ahead, the industry will survive this challenge.
Click here to see the complete interview with Faith Schwartz, and click here to see other interviews in the Mortgage Leadership Outlook Series.