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Issue link: http://digital.dsnews.com/i/1242936
74 During the first week of March, a deadly tornado became our nation's latest major natural disaster when it ripped through central Tennessee. Sadly, it was only the latest in a seemingly endless onslaught of fires, floods, and hurricanes that Americans have had to grapple with over the past several years. Today, we are all dealing with a new disaster that is bigger, scarier, and more deadly than them all. To be sure, the COVID-19 pandemic is a disaster of a different kind, yet its impact is even more catastrophic. Having spent the last few years managing natural disaster events, servicers may risk being overconfident, thinking that they have disaster preparedness down pat. In this environment, however, the obstacles for default servicing are mounting exponentially. Federal, state, and investor requirements continue to shift. With an evolving climate, an increasing number of natural disasters, and now the coronavirus, servicers need to quickly reevaluate how rigorous their processes truly are—and what they should do to improve them. THE CHALLENGES OF A PANDEMIC Even with the best of outcome scenarios, the coronavirus promises to ignite delinquency rates. As families across the U.S. prepare to deal with businesses shutting down for an undetermined time frame, news of economic distress and volatility is soaring. e potential ripple effect of this pandemic disaster is virtually unfathomable. Homeowners face income loss on multiple fronts, including layoffs, business closures, the inability to work due to absence of childcare, and, most importantly, loss of work due to contraction of the virus. Disaster relief options are beginning to take form. On March 10, Dr. Mark Calabria, Director of the Federal Housing Finance Agency (FHFA), reminded mortgage servicers that "hardship forbearance is an option for borrowers." e Federal Housing Administration (FHA) provided similar guidance, prompting servicers to offer FHA loss mitigation solutions to distressed borrowers. As the breadth of impact escalated, both agencies quickly responded with the issuance of a two-month moratorium on evictions and foreclosures. e mortgage industry as a whole is proactively following guidance from the Centers for Disease Control and Prevention (CDC) in efforts to prepare for this pandemic disaster. However, the question of business continuity and access to liquidity will play an equally important role in addressing the relief effort. WHEN THE DOMINOES BEGIN TO FALL With COVID-19 putting servicers' best practices to the test, automation is more important than ever. Feature By: Jane Mason