Servicers Prepare for COVID-19 Aftermath

When COVID-19 hijacked the headlines in March in the United States, economic activity throughout the country was paralyzed. First-time unemployment claims poured in at an unprecedented pace, according to TheFinancialbrand.com.  

In order to negotiate the crisis on the brink of barreling in, the government and financial institutions hit the ground running, installing economic measures, including stimulus checks, additional weekly unemployment benefits, and the Paycheck Protection Program. Banks and credit unions kicked in as well, offering payment suspensions in the form of deferrals and forbearances. 

While these protective measures have salved the most extreme of consumer delinquencies, what lurks around the corner once these protective measures run their course?  

With the volume of delinquencies squarely in mind, numerous lenders have been prepping their collection groups in the shadow of the pandemic. This will pay dividends once things bounce back to normal, during such times when collections groups follow up with customers who’ve not made their contractual payments. The economics and integrity of lending would be severely undermined without these services, which would wreak havoc on consumers, leaving many with the inability to access credit.  

The table’s now set in terms of corporate resources, including budget, IT capacity, project management personnel to prepare for the flood of delinquencies. 

While the current playbook might yield guidance, a preponderance of the circumstances today revolving around the pandemic is unfamiliar, demanding fresh ways of thinking and hyper exploration of current protocols and philosophies, reportedly.

With COVID-19 providing a facelift to our daily lives and workflows, the mortgage industry’s in the crosshairs; enduring the pressure of forbearance programs, staffing impacts, remote working, and potential liquidity shortfalls.  

Homeowners, too, are feeling the pinch. If dealing with the stress of hurricane damage to your home, for example, wasn’t a heavy enough load, add factors like social distancing and possible job loss stemming from the pandemic, the strain becomes that much more pronounced. 

“There will be other disasters that happen in the next several months. There always are. And to add that on top of COVID, it just complicates everything,” said Samantha Montano, an emergency management researcher at the University of Nebraska Omaha, in a recent Scientific American article. 

“Customers are overwhelmed with many other things in a disaster situation, not just their mortgage,” said Dana Dillard, EVP, Corporate Social Responsibility at Mr. Cooper Group.