According to Black Knight’s Mortgage Monitor report, 2.4 million out of 6.1 million homeowners who have been in COVID-19 related forbearance plans have exited. And it appears that the remaining 3.7 million might have a longer path to exiting forbearance, which might seem like good news.
After looking at mortgage performance in the wake of recent recessions and natural disasters for clues, the impact of COVID in the first several months was nearly close to that of major hurricanes in the past.
However, it does look like that these trends have started to deviate, looking at the three-month average improvement rate since May’s peak in mortgage defaults. At the current rate of improvement, it seems that defaults would remain above pre-pandemic levels until March 2022.
We would still have a million excess defaults when the first wave of COVID-19-related forbearance plans reach their 12-month expiration period. As early-stage defaults would have already returned to pre-pandemic levels, the bulk of these will be serious defaults, when the forbearance clock runs out.
Of those borrowers who remain past due, 267,000 are inactive loss mitigation with their lenders. Also, multiple mitigating factors could help to reduce any resulting foreclosure wave.
While recovery has been slow and incremental, the bulk of homeowners who have come out of forbearance are currently performing on their mortgages. That’s roughly a third of the 6.1 million homeowners who’ve been in forbearance at one time or another since the pandemic began. Of those no longer in forbearance but still past due, the vast majority – some 267,000 – are in active loss mitigation programs with their lenders. Just 5,000 loans present significant risk – having left forbearance, are past due, and not engaged in loss mitigation efforts. Seventy percent of those were already delinquent in February before COVID became a factor.
Peoples Processing is uniquely positioned to help servicers of all sizes transform and scale their mortgage default servicing operations. At Peoples Processing, we have expert loan servicing teams and a robust platform for servicers to help manage the forbearance and other default-related requests with high quality and consistency level. The platform ensures 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 its logical closure and tracks SLAs, timelines, and flags compliance issues. Yes, our Mailbox
Monitoring Platform does that all. We can facilitate a quick and seamless Mailbox Monitoring System to streamline your default processing. Do get in touch with us.