Editor's note: This piece originally appeared in the September 2020 issue of DS News, out now.
Courtney Thompson joined Flagstar in 2014, bringing marked litigation, advisory, and consulting experience to her role. Thompson manages the direction, the strategy, and the teams responsible for all aspects of the bank’s delinquent asset servicing program, and is responsible for developing the business line’s data and portfolio oversight program, which delivers industry leading transparency into, and the strongest control environment around, the default mortgage servicing process.
What are the biggest challenges confronting servicers regarding the large number of loans that have gone into forbearance plans?
Well, no one really knows how to do “world pandemic.” Initially, it was, “How do we help as many people as possible in a short period of time?” Whether that be through our technologies, through the phone, to ensure that consumers were informed of their legal rights, which also evolved through the first month of COVID-19. We wanted them to know that we were here to assist them, and in the initial weeks of COVID-19, managing the consumer call environment was just as challenging as managing the consumer callback environment.
Because the type of consumer that’s been impacted by COVID-19 is not your traditional default consumer. It’s a customer that is used to being able to make the regular monthly mortgage payment, and they were just as shocked by this environment as we are. That concern was addressed by the industry with varying degrees of success, depending upon the loan servicer and the technology available to them. But I think that
the biggest challenge, as this has evolved, is really about the resolution piece. At Flagstar, we were thinking about, “How do we resolve this?” from the very beginning. We’ve established a dedicated team with a dedicated strategy, dedicated phone IVR technology, etc., because these consumers that came into this
pipeline that we just discussed in March and April will need an exit strategy through the various solutions that have been offered by all of the investors and insurers.
The biggest challenge now is ensuring that you have the right amount of people, the right strategy, and the right exit for each of these consumers from the individual forbearances.
What can the mortgage industry do to help homeowners avoid foreclosure during this crisis?
It’s a really good question. COVID-19 has really brought to the mortgage servicing industry equal concerns about ensuring that consumers are afforded all of their protection under the laws, with the balancing of certain assets that probably should go through and continue through the foreclosure process during this time period. The number-one thing that the industry can do is, first, ensure consumers understand their protections under the law. If consumers have a proper education about what CARESAct does, and what the investors and insurers have done in this place, the consumer then is in the best position to make the best decision about what their individual exit strategy from a forbearance should be.
One of the problems that mortgage servicers are facing right now is making sure that there’s enough education there, because many of the COVID-related solutions from the investors and insurers are only offered to consumers one time. So, you really want to, from a timing perspective, hit the consumer when
they’re really, really ready to make a regular monthly mortgage payment again. There’s a lot
of questions in the context of COVID-19 with regard to that issue, because of second wave, because of different states popping in and out of various statuses of lockdown.
Borrower education, I think, is the number-one way we help the consumer. Then, secondarily, we have to ensure that we’re careful in those conversations to make sure that the consumer understands their total relief under the law. On the front end of COVID-19, there was a real tension between, under CARES, “Do we start with a 90-day forbearance versus 180-day forbearance?” That was a key question that we were juggling, but really, CARES authorizes a 12-month forbearance for consumers. Despite the fact that the industry should
support financial accountability of the consumer to make sure that the consumer carries that urgency to want to get back into their regular monthly mortgage payment again, we also want to make sure that these
protections that were designed to help the COVID consumer are leveraged to the best of their ability.
This is where it comes into play with foreclosure. If their consumer opts into a COVID protection too soon, they might be victim to a longer-form loss-mitigation process later, extending or increasing their potential
opportunity to visit the foreclosure process. So, we want good, solid resolutions when a consumer is ready to make a regular monthly mortgage payment again, to hopefully pop them back into a performing status where
foreclosure is never even on the table for them.