Mortgage loan servicing business is experiencing significant challenges due to the COVID-19 crisis. With a rise in defaults, driven by surging unemployment, servicers are having to deal with an exponential increase in customer forbearance requests, and an impending surge in delinquencies and losses.
As a result, mortgage servicers need to rapidly build and operationalize their readiness plans for the next 6 to 12 months to support a significant number of distressed borrowers and ensure operational readiness.
As per a recent McKinsey pulse check survey and responses from mortgage-servicing executives, about 10 to 12 percent of mortgages may end up in forbearance, with 20 percent or more of these potentially progressing to default and requiring assistance. This means that more than one million customers may need assistance over the next 12 to 36 months. As a point of comparison, currently the industry processes about 45,000 loan modifications per quarter.
The time to Act is Now: Go-forward priorities
Servicers must rapidly build operational readiness in preparation for the significant surge in delinquencies expected in the coming months. Doing this right will require an end-to-end approach across the mortgage loan servicing value chain and targeted action in five areas:
1. Digital and self-serve
2. Streamlining loss-mitigation operations
3. Addressing capacity shortfalls
4. Portfolio risk segmentation and analytics, and
5. The development of a robust centralized “nerve center” program management capability
Several servicers have reported the capacity and availability of the right tech as a big challenge to manage high forbearance volumes. A thoughtful exploration of options such as BPO/subservicing/specialty servicing partners across customer risk segments should be considered, focused around capacity stress points in the current operating model.
Servicers will need wide-ranging people, process, and technology to support across areas such as Loss Mitigation, Loan Modification, Customer Service, Title Reports & Valuation, and Claims Processing.
At Peoples Processing, we streamline default loan servicing for mortgage companies. We have expert loan servicing teams and a robust platform for servicers that will help manage the forbearance and other default-related requests with a high level of quality and consistency. It will make sure that every request coming in is allocated to the relevant processor, in time, and SLAs for response are defined clearly. Through the system, servicers can also keep borrowers informed of options, and reassure them. The solution itself rides on robust technology and a unique ticketing system that tracks every request through to its logical closure and tracks SLAs, timelines, and flags compliance issues. Yes, our Mailbox Monitoring Platform does that all.
Many of our clients choose to partner with us as we offer end-to-end mortgage servicing support right from Loan Boarding, Mortgage Loan Modification to Managing Default Operations, and Loss Mitigation.
Peoples Processing is uniquely positioned to help servicers of all sizes transform and scale their mortgage loan servicing operations. We welcome the opportunity to showcase our capabilities and provide you with focused solutions that fit the needs of your mortgage loan servicing operations.