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44 Journal DIGITAL ENGAGEMENT VS. DEATH BY A THOUSAND CUTS: MANAGING THE POST-COVID SURGE IN DEFAULT SERVICING By Aspen Grove Solutions COVID-19 has struck the U.S. economy like a Mack truck, forcing over 36 million unemployment claims within two months. Simply capturing the more than four million mortgage forbearance requests from distressed borrowers nearly broke many servicing call centers. Managing this concentrated wave of delinquencies through resolution will take 20 times more effort. Servicers who use digital technology to engage with borrowers early and throughout the default process will experience better outcomes on every metric of success. Unprecedented Speed and Scale When it comes to economic impact, COVID-19 is completely different from the 2008 housing crisis. Back then, unemployment rose from 4.5% in April 2007 to 10% in October 2009. During COVID, unemployment soared from 3.5% in February to more than 13% in only six weeks—22 times the speed of the previous crisis. is presents a far more concentrated and intense challenge. e rapid implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and its follow-up packages and announcements mean that events have unfolded far more quickly this time around. Millions of forbearance applications will soon need to transition to programs to help borrowers remain in their homes. Given the vast numbers of borrowers emerging from forbearance at the same time in the very near future, current volumes of trained call-center staff will not be adequate to meet the challenge. How are servicers going to deal with this efficiently? How can you gather data and documents, communicate effectively, maintain compliance, ensure fairness and appropriate response, and make certain that nothing falls through the cracks? Hiring and training an army of call center staff won't solve the problem and will create many more challenges. Digital Borrower Engagement: Getting Ahead of the Wave Journey-driven borrower engagement that enables easy two-way communication, encourages and educates borrowers along each step in the process, and helps manage the flow of data and documentation across borrowers and servicers is the only efficient answer. is goes well beyond integrating a web portal, CRM and IVR system. Best-in- class borrower engagement technologies need to provide several capabilities that should now be considered standard: » Communicate frequently with every distressed borrower to offer personalized reassurance, education, status updates, and guidance SPONSORED CONTENT