With the nation inching closer to a full calendar year since the World Health Organization (WHO) deemed COVID-19 a national pandemic, the mortgage servicing market is bracing for a wave of foreclosures, forbearance issues, loan modifications, and uncertainty brought about in its aftermath. Actions taken by the government to offset record delinquencies have been beneficial to U.S. homeowners, but as deadlines approach and a time of normalcy approach, the default servicing side of the industry may be hit with volumes of daunting proportions.
DS News recently held the webinar, “Next Steps in Mortgage Servicing,” to discuss the present and future of the servicing sector as it braces for this next chapter. The webinar featured Steve Schachter, Executive Vice President, Market Leader & Head of Mortgage at webinar sponsor Sourcepoint; Michael Keaton, Chief Servicing Officer for Shellpoint Mortgage Servicing; Sundara Sukavanam, Chief Digital Officer (CDO) for Firstsource Solutions; and Courtney Thompson, SVP of Default Mortgage Servicing at Flagstar Bank (also a member of the DS News Editorial Advisory Board).
President Joe Biden recently announced an extension of the moratorium on home foreclosures for federally-backed mortgages through the end of June. Federal intervention has been key to keeping homeowners in their homes during these tumultuous times, however keeping the consumer appraised of these changes will keep servicers on their toes.
“We have already received guidance from Fannie, Freddie, and the FHA that differs in some ways in terms of how to differentiate the terms of forbearance,” Keaton said. “I am looking forward to seeing from the Administration or the FHFA the ability to pull it all together and say, ‘Let’s agree and let’s coalesce under a single set of standards.’”
Thompson added, “With the extended forbearance protections offered by Fannie, Freddie, the UDSA, VA and FHA, extended forbearance protections means that humans are taken care of … which is always our first concern and priority and that some of our practices can begin again in a post-COVID default environment.”
Servicers have adapted to the new norm as well, having to keep pace with a nation in the middle of a very new experience for all due to the pandemic.
“Servicers need to be knowledgeable on changes and completely up-to-date and making that information convenient for borrower access. Servicers need to be very clear with what they are reporting and how well they are doing,” said Schachter. “We are anticipating a regulatory approach to timeliness, investigations, and audits … there will be some amount of change there, and potentially, how they would deal with non-compliance if it’s found. More broadly, we think there is going to be some more risk in the operating environment.”
With both U.S. homeowners and the mortgage servicing space blindsided by the pandemic, Thompson noted a new population, one that was new to the delinquency side, was born and the industry needed to find a way to handle this emerging market.
“We had a whole new group of humans that were in default and entered into the delinquency process,” explained Thompson. “This was not your traditional default consumer … these are consumers who are not used to navigating the different channels of default, whether it's forbearance, loss mitigation, or a repayment plan. There are consumers who are in something we have all never dealt with before, this world pandemic!”
Volume on the servicing side remains a primary concern as moratoria are set to expire and the industry needs to gear up for an influx of business.
“The challenges for servicers on one side is supporting homeowners, but on the other side, some of the challenges are not really different than before,” said Sukavanam. “How do I plan for a demand that I can’t forecast, and how do I become more efficient? How do we continue to drive quality?”
Schachter noted, “We have borrowers who are into products now that they can be into for quite some time. I see a lot of opportunity for investment across the entire servicing suite, including default.”
All webinar participants agreed on one thing, the servicing sector must work hand-in-hand with a nation not only reeling from a year-long pandemic, but a nation dealing with its impact on the biggest investment in their lives, their home.
“One of the biggest things servicers can do today is help homeowners understand what’s really going on,” noted Keaton. “Here is what we as an industry can do to help you and here is what we can’t do in your particular situation, but here are some options. Information helps homeowners understand the situation they are in.”
Click here to view a recording of the webinar.