Widespread forbearance and delinquencies, at never-before-seen levels, are upending default servicing operations across mortgage companies. In mid-May, overall forbearance stood at 8.16% while forbearance of Ginnie Mae-backed mortgages touched 11.26%, according to the Mortgage Bankers Association. Fannie Mae has also indicated that the percentage of its loans in forbearance could rise to 15% in 2020. 38 million Americans have already filed for jobless claims while delinquencies soared by 1.6 million in the month of April, the largest one month gain ever. With the continued uncertainty surrounding the timing and pace of recovery, servicers must rethink their default servicing operations and technology to mitigate the risks to their business – now as well as in the foreseeable future.
The short and the long-term impact of rising forbearance, loan modifications and mortgage defaults can decimate underprepared servicers. Attempts to ramp up large scale loss mitigation initiatives can lead to escalating administrative costs and slower cycle times, negatively impacting borrower experience. Implementing changes to default servicing processes to ensure compliance with emerging regulatory guidelines will prove equally daunting. On top of it all, servicers must ramp up their engagement with borrowers, many of whom are confused and panicked, during this challenging time.
While servicers cannot do much to halt the tsunami of delinquencies, tapping into cost-efficient and seamless support offered by an experienced Platform-based Services provider – one with extensive domain and technology capabilities – can help strategically bolster default servicing operations and handle the substantially higher loss mitigation volumes. Here’s how.
People and process support
Servicers will need wide-ranging people and process support across areas such as Loss Mitigation, Mortgage Modification, Customer Service, Title Reports & Valuation and Claims Processing.
- Enabling support for early intervention and collections, initial file intake, processing, and underwriting, can help optimize loss mitigation processes, increasing efficiencies and accelerating cycle times while reducing costs.
- Outsourcing services such as loan modification underwriting, document preparation, closing, booking and recording, title and property reports, and claims processing can reduce the burden on your internal teams while keeping borrower engagement high.
- Nervous borrowers and uncertain times call for focused, proactive customer engagement. This means designating a single point of contact (SPOC) for every borrower and ensuring 24/7 omnichannel support that enables borrowers to engage on a channel of their choice and at a time of their convenience. An agile service provider can also quickly deploy and scale a work-from-home (WFH) model for customer service support, ensuring uninterrupted customer support even under the most challenging circumstances.
When it comes to technology, Intelligent Automation that combines workflow automation with Artificial Intelligence (AI) and advanced analytics provides a compelling solution to tackle the challenges posed by the pandemic. Automating borrower communication and notifications as well as loss mitigation and loan modification processes will be key to improving efficiencies and managing spikes in processing volumes. A service provider with deep experience in supporting loss mitigation and relief programs in the past can establish instant access to workflows and technology that are critical to supporting the rapidly evolving conditions on the ground.
While the pandemic has created unforeseen and daunting challenges in its wake, proven Platform-based Services solutions can be judiciously combined to create powerful solutions for the new reality. Now is the time to use them.
Watch how Sourcepoint can help you reimagine your default servicing operations for the new reality.