All signs point to 2022 as a year in which the extraordinary mortgage volumes of recent months, and the challenges that followed, will taper off. However, factors like heightened regulatory pressures will create new challenges for servicers in the new year.
Let’s dive into what the mortgage servicing landscape will look like in 2022.
Forbearance Expirations Will Rage On
The wave of forbearance plan expirations won’t be in mortgage servicers’ rearview mirrors just yet. According to the Mortgage Bankers Association (MBA), one million borrowers were still in forbearance plans on October 31, 2021. That’s a daunting number for mortgage servicers who are currently diligently working through large backlogs.
And Black Knight’s October 2021 Mortgage Monitor Report implies that those backlogs won’t be shrinking anytime soon. Black Knight predicts that mortgage servicers will get hit with an additional 100,000 forbearance expirations each month during the first quarter of 2022.
The End of Flexibilities Will Increase Compliance Pressure
In April 2020, mortgage regulators, including the Consumer Financial Protection Bureau (CFPB) and the Board of Governors of the Federal Reserve, temporarily suspended action against servicers who couldn’t meet certain Regulation X timing requirements. The regulators stated that they would provide this flexibility as long as servicers were making “good faith” efforts to ensure that borrowers were getting the help they needed within a reasonable period of time.
Now, over a year and a half later, the regulators have concluded that enough time has passed for servicers to have adapted. In November 2021, the agencies issued a joint statement announcing that they will be resuming all supervisory and enforcement practices.
What does this mean for servicers in 2022? It means that they will be required to meet all timing requirements once again – even while working through forbearance plan expiration backlogs and dealing with the expected new wave of exits.
The CFPB Will Keep a Close Eye on Mortgage Servicers
In addition to the joint statement the regulators released, the CFPB released a report entitled “Mortgage Servicing Efforts in Response to the COVID-19 Pandemic” in November 2021. The report states that the bureau is continuing its efforts to carefully monitor servicers for law violations, assess how individual servicers handle borrowers exiting forbearance, and conduct compliance monitoring. The report also states that the CFPB will be analyzing consumer complaint data related to mortgage servicing and forbearance.
It’s clear that the CFPB’s expectations of mortgage servicers are high and will remain so. This, combined with the predicted wave of forbearance exits and the end of Regulation X flexibilities, translates to heightened pressure for mortgage servicers in 2022.
Overcome Challenges & Grow Your Servicing Business in 2022
Fortunately, there are solutions available that can help servicers overcome the above challenges in the new year.
At MetaSource, we offer QC services that can help servicers identify and correct areas of compliance weakness. QC issues do more than create potential exposure to regulatory action – they create inefficiency. From missing and incomplete documentation to setup errors for escrow or hazard insurance, common servicing QC findings are a huge source of wasted time. And with the heightened expectations and added pressures ahead in 2022, servicers need all the time they can get. Our servicing QC audits can help you zero in on the problems that are holding back your business.
We also offer digital mailroom solutions that can help servicers meet the CFPB’s expectations. A digital mailroom expedites reviewing, approving, routing, and locating documents all while minimizing errors. With such a solution, servicers can ensure efficient communication with borrowers and help them avoid foreclosure as they exit forbearance.
MetaSource has the mortgage solutions you need to make 2022 your year for moving ahead of the obstacles. Our solutions include:
- Servicing QC Audits
- Mortgage Workflow and Automation Tools
- MERS Compliance Services and Technology
- Lien Release Service
- Digital Mailroom Services
For more information on how to succeed in the new year, give us a call or visit our blog post on the mortgage market trends to watch in 2022.