This blog details the summary of the COVID report that FannieMae recently shared around COVID related challenges by mortgage servicers.
The COVID-19 pandemic has negatively impacted many industries, leaving many households with reduced income or unemployment. In response to this unprecedented challenge, mortgage lenders and servicers adapted rapidly to implement nationwide forbearance programs mandated under the CARES Act.1 Many homeowners experiencing a hardship can opt into a mortgage forbearance plan, which allows them to pause or lower their monthly payments for up to 12 months.2 In exiting forbearance, homeowners need to work with servicers on a plan to pay back the amount of reduced or paused payments.
In early September, Fannie surveyed over 100 mortgage executives, via the Fannie Mae Mortgage Lender Sentiment Survey®, to better understand the biggest challenges servicers faced in offering assistance to impacted homeowners via forbearance programs and in communicating post-forbearance repayment plan options.3 In addition, we asked the executives who worked in mortgage servicing during the 2008 housing crisis to assess, separately, what aspects of servicing they found more challenging and less challenging compared to the 2008 crisis.
As the industry contended with a litany of policy updates and homeowner inquiries, the leading challenges identified by servicers were:
1) keeping up with policy changes from investors;
2) customer-facing staffing capacity; and
3) training the customer-facing staff to provide guidance to homeowners on mortgage relief and loss mitigation options.
Technology and the process for homeowners to request assistance were much less of a concern. In addition, nearly 70 percent of mortgage servicers said their organization offers a website with mortgage relief information and payment assistance requests. Moreover, nearly 60 percent reported that their website helped reduce call center volume from homeowners inquiring about forbearance plans.
When asked about the biggest challenges of interacting with homeowners, servicers most frequently cited: 1) explaining clearly to homeowners post-forbearance payment plans; 2) explaining clearly to homeowners the potential implications of taking a forbearance plan; and 3) periodically checking in with homeowners to see if they are ready to exit forbearance.
Fannie also asked those survey respondents who worked in mortgage servicing during the 2008 housing crisis to compare their thoughts on the industry’s response then to its response to COVID-19-related challenges. A plurality of respondents found most aspects of servicing to have been less challenging this time – to include data and technology standards, the process by which homeowners request assistance, and more generally "helping homeowners overcome hardship and stay in their homes." The one area in which respondents said it was more challenging in 2020 regarded "keeping up with policy changes from investors."
In 2020, the servicing industry once again demonstrated its ability to adapt efficiently and timely in order to offer distressed homeowners much-needed mortgage relief. Since the 2008 housing crisis, common standards in servicing practices established the foundation of minimum expectations for borrower outreach. While those common standards played an important role in providing the industry a leg-up during this crisis, as evidenced by the survey, it was widely recognized among servicers that the challenges faced this year required a different response. And although the sudden surge of homeowner demand for mortgage assistance has receded, many are still in need of help accessing the mortgage relief and loss mitigation options available. The need to act timely remains a priority for servicers, as is the need to communicate clearly to borrowers.
We can all believe more fully coordinated efforts across the industry to align policy and direction can help servicers respond to the current crisis and future crises with even greater effectiveness.
To learn more, read the Fannie Mae Mortgage Lender Sentiment Survey Special Topic Report (below) and contact us to discuss how our technology and default solutions can assist your team via mslonaker@mattallendevelopment.com.
