DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1294963
70 How do you solve (or prepare for) a problem you know is coming but don't know how big it's going to be? at's the challenge facing the industry several months into the CARES Act. So far, more than 4.1 million borrowers have requested forbearance on mortgage payments; much of the demand coming in the first 45 days. Since then, enrollment has slowed, and a significant percentage of forbearance-takers have continued to make mortgage payments. But will these trends hold? e answer ultimately depends on the speed and shape of the recovery: will it be a fast, V-shaped recovery or will unemployment linger north of 10% through the end of 2020 as the Federal Reserve is predicting? One of the most widely referenced models suggested in May that forbearance requests could eventually top 10% and possibly go as high as 15%. At the low end, this would mean more than 6 million borrowers will require our industry's assistance. Near-term, that assistance includes handling in-bound calls to enroll borrowers into forbearance, then re-contacting them at various intervals to determine continuing needs. At the end of forbearance periods, which will range from 90 to 360 days, servicers will need to contact millions of borrowers and explain the deferral process. Assuming the economy has reopened, a significant share of these borrowers will most likely qualify for streamlined deferrals, enabling them to add missed payments onto the back end of their mortgage. Others will need more time and/or help, which will most likely result in loan modifications. e unfortunate reality is that more than 1 million loans could continue to fall through the default cascade into short sales, deeds-in-lieu, and foreclosures. And don't forget the 1.3 million mortgage borrowers who were already in some stage of delinquency before mid-March and ineligible for forbearance (although they're currently protected from foreclosure). Unlike the last mortgage crisis, these workouts won't occur over a five- or six-year period but could be compressed into a two- to three-year time frame. In late June/early July, deferrals for 90-day forbearances moved to next stage. e MBA reported in early July that nearly 50% of borrowers were requesting extensions, 43% Feature By: Joe Chappell HITTING A MOVING TARGET Modeling the impacts of COVID-19 on mortgage default value streams can be challenging. Here are some tips.