COVID presents unprecedented challenges to mortgage servicers: honor Federal requirements for scale mortgage forbearances with minimal documentation, remain liquid for undetermined time frames, care for customers who need help immediately, and prepare them for protracted hardship scenarios.
In this piece, the first of a two-part series, we’ll look at how providing self-service options can help borrowers and servicers alike navigate this first phase. In the next installment, we’ll examine how servicers can educate and support borrowers throughout the hardship journey that the COVID-19 pandemic will touch off for many.
Background: Mortgage Forbearance by the Numbers
Since the passage of the CARES Act, which requires lenders and servicers to allow mortgage forbearances for up to a year, forbearance requests continue spiking daily. As of April 20…
- 5.95 percent of loans were in forbearance (up from 3.74 percent last week, 2.66 percent at the start of April, and just 0.25 percent at the start of March).
- Hold times for servicer call centers clocked in at 4.9 minutes (down from 17.5 minutes the week of April 7 and 10.3 minutes last week, but still up from the under-two-minute mark pre-crisis).
- Forbearance requests dropped to 1.79 percent of all portfolio loans (down from 2.43 percent the week before).
And it may grow from there as 22 million Americans lost jobs the past 4 weeks, wiping out job gains since the Great Recession.
Given that 74 percent of Americans live paycheck to paycheck in an economy likely to remain fully or partly shut down for several more weeks, consensus estimates call for weekly jobless claims to keep rising by the millions for the rest of April.
This means more forbearance requests, and increasing likelihood that forbearances may be just the beginning of the hardship journey for many homeowners.
Servicers must be prepared to usher customers through an efficient, caring, communicative hardship path in the coming months, as we’ll explore in the next installment of this series.
How Borrower Self-Service Speeds COVID Mortgage Forbearance
Ubiquity of forbearance in mainstream media headlines every day will continue fueling high volumes of borrower requests.
This means now is the ideal time for mortgage servicers to offer borrowers self-service options.
Borrowers win by getting their relief request submitted immediately, and servicers win by relieving strain on call centers and giving borrowers faster results and clearer communication.
A self-service portal, for example, enables a borrower to:
- Submit a forbearance instantly, from any device.
- Upload any necessary documentation (hardship LOEs, etc.).
- Track the status of their request (as well as any appeals, if necessary).
- Track the status of their loan on an ongoing basis with secure messages.
These capabilities remove a significant burden from servicers’ customer care teams, improve borrower engagement during extremely stressful times in their lives, and lower servicing costs.
Self-service portals can eliminate the need for tens of thousands of customer phone calls, which frees reps to focus on handling high-touch activities like helping borrowers finalize applications and advising on future scenarios.
Borrower Self-Service Removes Uncertainty & Improves Customer Care
When borrowers have access to a self-directed digital process on their phone, they don’t have to call an 800 number and wait on hold, explain their situation, then feel uncertain about how they’re going to get updates.
Uncertainty is a huge driver of stress, so when servicers can provide customers with tools that keep them informed and updated on their loan status, they’re also offering borrowers peace of mind during a life-altering disruption.
Less stress means less frustration, which benefits your customer care team advising these borrowers.
It also means borrowers are in a better state of mind for larger conversations about loan modifications and other options that may follow forbearance as their economic situation evolves.
Likewise, digital forbearance self-service requests also flag files for servicers to properly manage possible loan modifications and loss mitigation paths later.
Empowering Borrowers Lays the Groundwork for COVID Recovery
Mortgage servicers are on the front lines of helping borrowers navigate the COVID economy.
By offering digital self-service options to handle the loan forbearance process now, servicers set the stage for a stronger and more efficient recovery in the months to come.
Sagent stands on the front lines with servicers, powering you through this journey with your borrowers.
Please reach out to learn more about how we can help you right now today in the heat of COVID.
And stay tuned for part two of this series where we go deeper into advising borrowers as forbearance evolves into loan modifications and other outcomes.