Many servicers are watching the number of mortgage forbearances with angst! Forbearances, the unemployment level and the number of COVID19 cases are all linked. Unknowns include when the forbearance period will end and when will the US economy fully recover?
What will be the impact on the mortgage servicing business? Much like the Mortgage Crisis in 2008 – the industry is witnessing forbearances that could ultimately become 30-60-90 and 120 day delinquencies. Handling refinances/modifications for a larger population of loans in 2020 (20 million unemployed or more) vs. what occurred in 2008 (1.1 million loans that were 60+ days delinquent and many in foreclosure). The mortgage servicing industry is facing significant operational, financial, and regulatory compliance challenges as a result of the pandemic!
Hilltop Advisors’ Loan Servicing team is helping mortgage servicers to plan and execute changes to minimize the impact of the COVID19 challenges. The executed plan for targeted servicing areas will improve efficiency, “free up” key resources and reduce costs. The changes include the following:
- Planning new COVID19 loss mitigation efforts (especially for those borrowers who have the virus), integrating the special forbearance efforts with the CFPB’s required loss mitigation efforts and the required timing (whenever the forbearance period ends),
- Identifying any significant counterparty risk issues – subservicers, vendors, etc.,
- Tracking advances (all types) – loan specific, investor/servicer advance, reconciliation,
- Modifications or Refi resources – having adequate numbers of processors, underwriters, QC resources to handle modifications in compliance with the CFPB,
- Foreclosure process changes to decrease average process time and costs,
- Foreclosure claim technology applications used to recover more foreclosure expenses,
- Compliance with CFPB,
- Resource assistance,
- Litigation support and Experts to testify if needed
- Financial impact – planning for advances and utilizing various new Federal programs where the GSEs and Ginnie Mae will fund advances, tracking total advances and who (servicer or GSE etc.) funded what
- Cost of servicing – increased servicing efficiency and reduced costs is critical in a crisis as you will need to maximize key resources – Hilltop’s PerforMetrics© can help identify the operational areas to focus on.
Hilltop can assist your servicing team with the planning and execution of any identified changes to be made in your servicing platform. We can also help servicers like you to begin a “borrower risk rating” of all loans in forbearance and create the “playbook” as to how the servicer should proceed. Hilltop’s Servicing team has performed many engagements related to the 2008 Mortgage Crisis, the 2011 OCC Servicing Consent Order, CFPB regulatory reviews, servicer litigation, operational enhancements and cost reduction engagements.
We would like to discuss your servicing operation and determine if Hilltop can assist in any of the above efforts. Do you have some time for a call? Thanks Jeff
