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The Importance of Communicating With Struggling Borrowers

Editor's note: This story originally appeared in the November edition of DS News. 

Mortgage forbearance is still a reality for many borrowers and servicers, more than six months after the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) took effect on March 27Under the CARES Act, mortgage servicers must offer up to 12 months of forbearance, in up to 180-day increments, to COVID-19-affected homeowners who have federally backed mortgage loans for one to four-unit family properties.  

Although the number of loans in forbearance has declined from the peak of 8.55% in early Juneaccording to the Mortgage Bankers Association (MBA), 6.81% of loans (approximately 3.4 million homeowners) remain in forbearance as of September 27. New requests for forbearance have declined significantly but are still coming in—particularly from borrowers with FHA or VA loans.  

To accommodate the large volume of loans in forbearance, mortgage servicers must have functional, flexible, and effective forbearance processes in place. Creating clear forbearance and post-forbearance plans should improve borrowers’ understanding of forbearance, speed up the overall process, and preserve revenue while avoiding costly foreclosures. Servicers can ease the process for borrowers by following these steps. 

Read the full story on p. 70 of November's DS News, available here [1]