Articles
Improving Borrower Communication as Forbearance Ends: Learn How Mortgage Servicing Software Can Help Streamline the Process
In-house mortgage loan servicing is an important revenue source for credit unions and an excellent way to provide the exceptional member service required to earn loyalty. Mortgage servicers must comply with changing regulatory requirements while meeting members’ needs. Mortgage servicing software and web applications help credit union servicers meet forbearance-related servicing requirements.
As credit unions move into 2022, they must develop new processes and programs to assist members impacted by the COVID-19 pandemic. Since the disease struck in early 2020, 9.3 million mortgages were in forbearance at some point, allowing homeowners to pause their mortgage payments for up to 18 months. Most people have exited forbearance, but 1.4 million homeowners are still in forbearance as of September 26, 2021.
The deadline for extending or requesting new forbearance programs keeps changing. Initially, mortgage borrowers had until September 30, 2021, to request an extension on their forbearance. On September 27th, the Federal Housing Administration (FHA) announced that borrowers can request a new forbearance program—or extension of their existing forbearance—until the end of the COVID-19 National Emergency. The deadline to request initial forbearance for USDA and VA loans has also been extended.
Meanwhile, Congress has confirmed Rohit Chopra, an experienced consumer advocate, as the new Director of the Consumer Financial Protection Bureau (CFPB). Compliance experts are now warning that the Bureau appears to be poised to pursue an aggressive enforcement posture. Credit union servicers who fail to help their members avoid the higher risks of foreclosure could be considered non-compliant.
With a regulatory environment that emphasizes customer service for borrowers, credit unions need a solid communications and default servicing strategy to help members exiting forbearance avoid foreclosure.