Mortgage Forbearance Exits 101: How Servicers can Better Assist Borrowers Exiting Forbearance
Welcome to the third blog post in our Mortgage Forbearance Exits Series! This series covers relevant topics and provides tips for navigating the market during this stressful time.
The surge of Coronavirus Aid, Relief, and Economic Security (CARES) Act forbearance plan expirations is directly affecting mortgage servicers. In June 2020, 8.55% of servicers’ portfolio volume consisted of mortgage loans in forbearance, and as of October 10, 2021, this number has dropped to 2.28%, according to the Mortgage Bankers Association (MBA).
The current flood of forbearance exits is leaving mortgage servicers with a massive wave of borrowers in need of loss mitigation strategies and an equally massive wave of incoming correspondence. To increase servicers’ stress levels further, the Consumer Financial Protection Bureau (CFPB) promised to keep a watchful eye on servicers as they work with borrowers exiting forbearance and released new rules. Under these new rules, servicers have to be proactive about reaching out to borrowers and helping them avoid foreclosure.
But how can servicers properly assist borrowers exiting forbearance when there’s an overwhelming amount of correspondence coming in as well as enhanced pressure brought on by the CFPB’s new rules and promised scrutiny?
Adopt a Digital Mailroom
Being paper-reliant can hinder your abilities to act on time-sensitive files quickly and help borrowers in this time of need. A digital mailroom, on the other hand, makes handling incoming correspondence an automated process, saving you time and energy while also ensuring optimum communication with borrowers.
Here’s how it works:
- Your digital mailroom partner retrieves your incoming correspondence.
- Your partner sorts, scans, and digitizes your mail.
- Your mail is automatically delivered to the right person or system.
- Authorized personnel can access files anywhere, at any time.
A digital mailroom not only makes reviewing, approving, routing, and locating documents quicker, but minimizes errors. Such a solution can give your staff time to focus on core tasks and better help borrowers avoid foreclosure.
Seek Loan Modification Assistance
The CFPB’s new rules enable mortgage servicers to offer certain loan modifications to make the transition into post-forbearance easier on borrowers. Servicers can require fewer borrower documents, lower interest rates, and can also tack on all the missed payments to the end of the loan.
However, servicers need to be very thorough when handling modifications. This is where an experienced partner can be of great help. A trusted partner can perform servicing quality control audits on completed loan modifications.
Improve CFPB Compliance with the Right Partner
Ingesting mortgage documents and data in a timely manner can be a challenge with the influx in correspondence and the CFPB’s scrutiny during the end of forbearance. Documents that go missing or are incorrectly indexed can expose your organization to compliance risk. Working with a business process outsourcing (BPO) partner with mortgage industry experience can greatly reduce the risks involved in the process.
Using optical character recognition (OCR) technology, a trusted partner can help you rest assured that the exact information from your documents has been extracted and properly indexed. Then, authorized staff members can easily access files from anywhere, at any time and offer borrowers the loss mitigation guidance they need in a timely manner.
Top partners also offer a full suite of CFPB-compliant mortgage servicing quality control audits and web-based reporting software so servicers can view and sort findings, monitor trend reports quarter over quarter, and find the root cause of any issues.
Why is MetaSource the Right Partner?
According to ATTOM Data Solutions, foreclosures increased by 9% in the first quarter of 2021 and with the recent end of the foreclosure moratorium under the CARES Act and the surge in forbearance exits, this number will likely continue rising. This is why servicers need to get the help they need to properly assist borrowers as soon as possible.
MetaSource has teams across the U.S. that offer mortgage servicers solutions for streamlining processes as forbearance programs end. With unmatched experience serving the mortgage industry and offering high-volume document scanning, document management, digital mailroom, and mortgage quality control services, MetaSource is fully equipped to help you overcome challenges during this stressful time.
Contact MetaSource to find out how we can help you better assist borrowers exiting forbearance or download our whitepaper on How to Prepare for the Future of Mortgage with a Digital Mailroom to learn more about what an automated mailroom can do for you.
And don’t forget to check out the other blog posts in our Mortgage Forbearance Exits Series: How to Navigate the Surge of Forbearance Exits and What the Forbearance End Date Means for Housing Agencies.