Mortgage servicing is back in the spotlight in a way that we haven’t seen since the post-financial crisis era. Many servicers who went through the ramifications of the housing crisis were educated in the school of hard knocks, but ended up graduating into prominent leadership roles due to their performance during that time. And quite a few women in mortgage servicing turned that experience into new opportunities. In fact, it was about that time I moved my automated workflow technology created at an international law firm and started up my business helping mortgage servicers streamline loss mitigation as foreclosures mounted.
This time around is not quite as catastrophic as the financial crisis, but the results are definitely severe enough to set up a challenging set of circumstances moving into the next year. More than one million borrowers remain in forbearance plans, the number of natural disasters affecting communities nationwide are climbing, and regulators are paying closer attention to how servicers do business moving forward.
Given these complexities, next year could be pretty rough. The good news is that this unfolding situation presents ample opportunities for servicers to streamline operations and find new ways to get customers the help they need. So too will opportunity knock once again for women to step up as leaders and bring fresh new perspectives and ideas to the mortgage servicing sector.
Servicing Will Grow More Complex
The top goal of every servicer should be evolving their businesses to handle the expiring forbearance plans and foreclosure eviction protections, which will be a focal point of the industry well into the new year. It will be no small task.
As of this writing, the Mortgage Bankers Association’s most recent Forbearance and Call Volume Survey found more than 1.1 million loans remain in forbearance plans, including 15.3% of loans in the initial stages of forbearance and 74.8% in extensions. Looking at the total forbearance exits since last June, 16.7% of borrowers have exited forbearance without a loss mitigation plan, 13% had loan modifications, and 7.1% paid off their loans by refinancing or selling their homes. Other loans resulted in loan deferrals or borrowers who continued to make their payments.
These disparities mean servicers must consider a wide range of options when working with borrowers coming out of forbearance. It means reducing compliance risks by implementing required workflows, managing and tracking all customer interactions, providing proactive responses to customers, and being able to access the entire history of each customer’s workout under the CARES Act. In other words, servicers working with borrowers on forbearances, extensions, deferrals or foreclosures require a seamless servicing process, pushing for zero gaps between the process of moving from forbearance to a loan modification or to any other option.