Going to post-tolerance: making the process efficient


Mortgage forbearance is still a reality for many borrowers and service agents, more than 10 months after the Law on Aid, Relief and Economic Security (CARES Law) on Coronavirus (Law CARES) on March 27, 2020. months of forbearance, in increments of up to 180 days, to homeowners affected by COVID-19 who have federally guaranteed mortgages for family properties of one to four units.

Although the number of loans in forbearance has declined from the peak of 8.55% in early June, 5.37% of loans (around 2.7 million homeowners) remain in forbearance as of January 10.

To cope with the large volume of loans still in forbearance, mortgage agents must have functional, flexible and efficient forbearance processes in place. Creating clear forbearance and post-forbearance plans should improve borrowers’ understanding of forbearance, speed up the overall process, and preserve income while avoiding costly foreclosures. Robust mortgage management software, such as Mortgage Servicer® from FICS, has extensive loss mitigation capabilities and forbearance windows that make it easy to keep track of forbearance plan details, deferral of payment and debts. loan modifications. Service agents can make the process easier for borrowers by following these steps.

Communicate with borrowers

Educate borrowers about the forbearance process. When implementing a forbearance plan, mortgage agents should make it clear to borrowers what forbearance means, the repayment options available to them, and the implications (for example, a potential delay in their ability to pay. refinance their loan). Repairers can refer to Fannie Mae and Freddie Mac’s “COVID-19 Forbearance Script for Repairers with Homeowners” for how to discuss what forbearance means, how it works, and reimbursement options.

Respond quickly. In a letter sent to 11 major service providers, requesting information about their forbearance program, the US House Committee on Financial Services said that “borrowers seeking help should be able to contact a representative customer service without excessive waiting times or other delays “.

Repairers are experiencing a further jump in call center volumes. According to the MBA’s forbearance and call volume survey, for the week ending January 10, 2021, service volume increased to 9.2% from 7.2% the previous week, and times call wait times were reduced from 2.7 minutes to 3.6 minutes in the previous week. Average call duration also peaked at 8.5 minutes, down from 7.8 minutes the week before.

Service agents must work diligently to answer borrower’s questions and meet their needs promptly during this stressful time. Repairers should take advantage of web-based borrower applications to provide mortgage statements and information to borrowers who are not subject to forbearance, reduce routine phone calls, and give repairers more time to speak with borrowers subject to abstention.

Help borrowers create a post-abstention roadmap

Some borrowers mistakenly assume that they have to repay missed payments all at once. In fact, they have several options for reimbursement. For example, Fannie Mae’s COVID-19 deferral option allows borrowers to defer the amount they owe at the end of their loan term (i.e. the due date) .

Thirty days before the end of the forbearance period, mortgage agents should contact borrowers to discuss repayment options and determine which ones are best for them. Borrowers may have several options:

  1. Pay off the loan in a lump sum if they can (perhaps by withdrawing funds from their 401k, IRA, or other retirement plan).
  2. Extend the abstention period. As of January 10, 80.45% of loans in forbearance are subject to an extension of forbearance.
  3. Benefit from a loss mitigation plan. This can include a repayment plan to keep borrowers at home, or loan modifications such as canceling part of the loan or extending the terms of the original loan.

If a loss mitigation plan is the best option, borrowers will complete a spreadsheet to allow the manager to assess income, loan amount, and whether a repayment plan or loan modification will be the best option. If a repayment plan is the way to go, the borrower may be able to start repaying at the end of the forbearance period. Loan modifications may include adjusting principal and interest (P&I) payments, extending the term of the loan to 30 years or more, and / or lowering the interest rate. Service agents should explore these options with borrowers to determine what best meets their needs.

Follow the details of the forbearance and post-abstention plan

With so many loans still in forbearance, service officers need an efficient way to track the specific terms / details of each borrower’s forbearance and post-forbearance plans. Mortgage management software must be able to support deferral of payment and other loan modifications.

Use state-of-the-art mortgage software, such as Mortgage Servicer® from FICS, which has extensive loss mitigation capabilities, including a forbear / defer window that allows managers to track:

  • Loan level forbearance plan details
    • Terms: number of months, start and end dates
    • Borrower details (e.g. type of hardship, forbearance plan status)
  • Post-abstention plans
    • Repayment plans (e.g. reduced payments)
    • Loan changes (e.g., new term, interest rate)

Service agents can facilitate the forbearance process by communicating effectively with borrowers and helping them develop the right plans. By using mortgage management software such as Mortgage Servicer® to track details of forbearance and post-forbearance plans, repairers can more effectively manage the increased number of modifications. Versatile software allows borrowers and service providers to navigate the forbearance period with relative ease, stay up to date on the timeline, and get a more complete picture of the steps required to deliver the borrowers’ mortgage to a bank. Current state.

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