Clarifire Conversations

July 16, 2024

New Options Help Veterans Avoid Foreclosure

Following up on our last blog, ‘Servicing Answers to High Interest Rate Pressures,’ it is crucial that mortgage servicers do not succumb to the ongoing news of tumbling interest rates and the possibility of multiple Federal Reserve rate cuts on the horizon. With inflation reports calming, the average 30-year mortgage rate dropped under 6.50 percent; however, this does not change the extensive gap between today’s rate and the historically low interest rates that are tied to the majority of mortgage loans currently being serviced. As mortgage delinquency rates appear to be teetering on a precipice, industry agencies are gearing up for a change in loss mitigation strategy. Last month, Clarifire delved into the new FHA Payment Supplement Program. This month, we’re taking a look at the Department of Veterans Affairs (VA) recently announced changes designed to assist veterans at risk of foreclosure.

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June 11, 2024

Servicing Answers to High Interest Rate Pressures

Will higher interest rates put your delinquent borrowers in jeopardy? Pushed to new lows on the cusp of the financial crisis, the average annual interest rate for mortgages stayed under five percent for 12 years, lasting from 2010 until 2022, when the average annual rate climbed to 5.53 percent. Rising above seven percent in October of 2022 and then above eight percent in October of 2023, where do we sit today? Amidst mixed predictions for the continued direction of interest rates, Bankrate clocked the average interest rate for April of 2024 at 7.05 percent. With the vast majority of homeowners holding mortgages with an interest rate well below this mark, are mortgage servicers ready to help the current borrower who faces default? 

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May 14, 2024

Collaborative Security Strategies Combat Digital Threats for Mortgage Servicers

Data breaches and cybersecurity risk looms large in today’s high-tech landscape, with digital security threats becoming more prevalent and sophisticated. A recent MIT Sloan report identified three main reasons for the rise of emerging risk and exposure to data theft: the “misconfiguration of cloud environments, the emergence of new and more dangerous types of ransomware, and increased exploitation of vendor systems.” These areas of vulnerability are presented globally but are certainly relevant to mortgage servicing susceptibility to cybersecurity threats. In light of these threats to the servicing digital ecosystem, staying ahead in your cybersecurity practices is not merely an option, it is a necessity.

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April 09, 2024

Accelerate Change to Alleviate Pain – An Oxymoron?

The need for operational change is a never-ending fact of doing business. Required and yet scary to staff and customers, change comes from all directions. Servicing has continuously grappled with regulatory and internal operational change since the financial crisis, compounded by pandemic impact. The advent of artificial intelligence and the acceleration of technology overall have added pressures to abruptly transform and evolve how we do business. Embracing these changes can be powerful, propelling servicers to innovate systems, envision processes differently, and ingest regulations and internal requirements imposed on us; however, the path of transition can be painful, even when the end result is to remove pain points and gain change efficiencies.

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March 11, 2024

Mortgage Executives Share Their Biggest Challenges and Solutions

Mortgage servicers gathered in Orlando for the annual MBA Servicing Solutions Conference & Expo to explore insights on what to expect in 2024. A compelling session, “Executives Discuss Their Challenges, Goals”, revealed a consistent need and desire to focus on reimagining servicing. Whether servicers are struggling under the pressures of customer call volume, Basel III and capital requirements, Mortgage Servicing Rights and warehouse line risk, or the cost to embrace current technology, the answer from executives was the same… take a pause from the disruption and redirect your efforts toward analytical tools, workflow automation as a no-code solution, as well as seriously looking at your processes with a fresh perspective. Think about working differently with your process complexities automated and organizational silos eliminated. Let technology do the heavy lifting while your teams focus on critical customer interactions.

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February 14, 2024

Responsible Innovation - A Future Vision for the Mortgage Industry

The mortgage industry has shown its aptitude to embrace technical innovation and digitization, but are we responsible in our approach? No one would dispute that the front-end new origination application process has become more accessible, responsive, and thorough through digitization and robust origination platforms. However, complex operational processes post-application (servicing) remain labor-intensive, sluggish, and reliant on antiquated manual processing. This creates unnecessary fragmentation and chaos, which impedes borrower engagement, generates inefficiencies, and drives up costs. The industry needs to embrace the vision that ends this disruption, adopting innovation that pushes digitization throughout the loan and customer life cycle.

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January 15, 2024

Break the Rules: Reimagine a Digital Customer Experience in 2024

As we embrace a brand new year with mortgage projections hinting at a promising year but not committing, it’s the perfect opportunity to reevaluate your stance on the digital experience for our customers, as well as ourselves. The last few years gave us a big push as we grappled with unprecedented market volatility. It also gave our customers a taste of meaningful self-serve applications and 24/7 real-time accessibility available through digitization. This access is achieved through modern workflow automation, electronically coordinating data and activities across your organizational processes. Your customers, from baby boomers to Gen Z, have already become accustomed to tapping information and decisioning that is available at their convenience, so don’t let them down.

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December 14, 2023

Break the Rules: Reimagine Mortgage for Customer Expansion

The mortgage industry and financial services, in general, have been flooded with rules. Dating back to the advent of the Dodd-Frank Act and fast forward to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, managing operational processes within a framework of variable rules has become a fact of life…. But do we do it well? And, even if we do it well, we may be overlooking a real opportunity, the chance to use technology for end-to-end visibility of processes, customer preferences, and your organization’s product offerings. 

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November 09, 2023

Foreclosures are back!

The Q3 2023 U.S. Foreclosure Market Report recently published by ATTOM Data Solutions reveals what lies ahead for mortgage servicers. Illustrating an increase in foreclosure activity that has continued to escalate since the lapse of the government’s foreclosure moratorium, we are quickly finding ourselves back where we started prior to the pandemic.  Before you think this is no big deal… let’s look at what’s happening, why this surge in activity is different, and what you should be doing to stave off disruption.

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October 11, 2023

Tapping Innovation to Ignite Change Automation for Mortgage Servicing

Are you thinking it's time to reexamine your approach to technology innovation? Stop waiting, now is the time to implement change capabilities into your mortgage servicing operation. Don’t you want it all? In today’s fast-paced mortgage environment where servicers remain under immense pressure to streamline processes, cut costs, enhance customer engagement, and move nimbly all at that same time, some servicers are still building their own software and struggling to keep up. We’ve heard this many time before, yet still revert to manual processes and added labor when under pressure, an approach that is simply no longer sustainable in this dynamic servicing ecosystem. To thrive and compete in the mortgage industry, servicers need to automate change with smart logic that leverages modern process components accessible throughout your organization and accelerates trusted, proven innovation.

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September 14, 2023

FEMA, Floods, Fires, and Funding, Oh No!

Natural disasters resulting from hurricanes, floods, wildfires, and earthquakes can strike at any moment, leaving behind a trail of destruction and devastation. In the last two months alone, unsuspecting homeowners have contended with the aftermath of Hurricane Idalia and the ravages of the Maui wildfire. Access to relief becomes a real struggle under this duress, compounded this year by the Federal Emergency Management Agency’s critical funding shortfall. Under such trying circumstances, homeowners don’t know where to turn and often rely on their mortgage servicer for answers to questions on financial relief to help recover and rebuild their lives. Are you prepared to respond to their needs?

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August 14, 2023

Digitizing Mortgage Default

The Federal Housing Administration (FHA) is looking to modernize mortgage default servicing processes by inviting more automation into the process and moving away from outdated face-to-face requirements. This illustrates another industry progression that has grown out of COVID-19 pandemic guidelines. From a modernization perspective, the Department of Housing and Urban Development introduced the corresponding proposed rule “to better align with advances in electronic communication technology and mortgagor engagement preferences.” The goal is to allow and encourage servicers to use a number of alternatives to face-to-face meetings and expand these revised meeting requirements to all borrowers in default.

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July 12, 2023

Conquering Record-Breaking Change

The impact of the COVID-19 pandemic on mortgage servicers and homeowners is not over. As agencies and industry stakeholders evaluate the residual effect on homeowners, the question becomes, did the industry help them, and where could we have done a better job? The Mortgage Bankers Association (MBA) recently defended the efforts of mortgage servicers in response to concerns published by the U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG). The MBA highlights how mortgage servicers were diligent in their efforts to help struggling homeowners, pointing to the numerous program changes and scaling to address record-breaking volume as underlying obstacles for servicers throughout the pandemic. However, during this period of lookback, it becomes clear that despite best efforts, servicers need to ensure readiness for future industry disruption, whether it comes from natural disaster, pandemic reverberation, economic calamity, or other sources. Are you ready? 

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June 13, 2023

How to Prepare For and Measure the Effectiveness of AI in Your Servicing Operations?

In today’s technologically advanced world, artificial intelligence is rapidly evolving and emerging through the modernization and adoption of advances in business process automation. The opportunities and availability are expanding exponentially, with questions around readiness simultaneously compounding. The incorporation of AI promises to significantly reduce workload, but how and where do you manage the introduction of these capabilities into existing operational and systems infrastructure? As you can imagine, the actual adoption of AI can be quite complex and, in a worst-case scenario, can create layered risk.

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May 09, 2023

Are You Tracking New CFPB Examination Updates?

The Consumer Financial Protection Bureau’s updated mortgage servicing examination procedures pull from lessons learned since their last update in 2016, with a strong emphasis on exam findings from the COVID-19 pandemic. For mortgage servicers, new agency procedures can be daunting. The updates published on January 18, 2023, were issued as a resource and have been incorporated into the CFPB’s 1,812-page Supervision and Examination Manual. This is the manual that CFPB examiners will refer to during their next visit to your office. Understanding these changes and their impact is paramount. No pressure, but these updates need to be identified and incorporated into your processes to ensure your next CFPB exam goes well. Clarifire is here to help you explore some of the latest changes outlined by the CFPB and, more importantly, help you incorporate updates into your operational business processes.

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April 11, 2023

Are You Ready to Offer Your Borrowers New Payment Deferral Options?

Piggy-backing payment deferral success from the pandemic, the Federal Housing Finance Agency (FHFA) just announced that beginning July 1, 2023, Fannie Mae and Freddie Mac can offer borrowers under financial duress, a six-month reprieve through payment deferral. As usual, there are nuances that accompany eligibility, but the benefit is that borrowers can continue to make the same monthly mortgage payment while deferring past due amounts to the end of the loan. Good news for servicers and homeowners alike as servicers will be able to access this program by way of Fannie Mae and Freddie Mac’s standard loss mitigation toolkits.

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March 07, 2023

The Best Regulatory Defense is Modern Workflow Automation

Are you suffering from regulatory fatigue? Has managing the latest default triggers become arduous? Whether from post-pandemic, pre-recession, or natural disaster, unexpected default strikes erratically and vengefully. In response, the regulatory burden doesn’t stop, even in a low-to-moderate delinquency environment. A recent Wolters Kluwer study found that lender regulatory anxiety is on the rise, with close to 70 percent of their respondents expressing concern in this area. This is not likely to ease as we continue to be in the center of disruption, currently combatting increasing MSR sales, rising interest rates, the sunset of LIBOR, the spotlight on fair lending, and margin compression. This list changes but the need for a strategic defense does not, so what’s your plan to minimize regulatory anxiety?

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February 07, 2023

Are You on the Road to Seamless Servicing Success?

Or are you stuck by the side of the road as others pass by? It’s time to stop doing the same thing… and getting the same results. The obstacles that face mortgage servicers continue to ebb and flow into 2023 with rising interest rates, increasing MSR sales, and worries of delinquency as inflation and unemployment numbers climb. Servicers can expect to grapple with the onslaught of last year’s originations, tackling loss mitigation as lack of affordability meets recession, including impaired working capital and profitability. Although dealing with a roller coaster of hurdles is not new for mortgage servicing, how we overcome obstacles is different. The question remains, are you stuck in the past?

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January 12, 2023

What You Need to Look for with the CFPB’s Forthcoming Rulemaking Activities

Regulatory and rulemaking actions were just released for the Consumer Financial Protection Bureau under the Unified Agenda of Regulatory and Deregulatory Actions for Fall 2022. It’s worth noting that six of the ten rulemaking topics assigned to the CFPB are new. It’s also significant that the Bureau has introduced rulemaking specific to nonbanks, along with deep dives into protecting consumers from credit reporting agencies, flawed home valuations, fees charged by depositories, and other possible discriminatory concerns.

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December 15, 2022

Are Your Borrower Calls Compliant With the New TCPA Ruling?

When was the last time you reviewed your borrower communication practices? As technology options continue to expand, so follows oversight. The Telephone Consumer Protection Act (TCPA) of 1991, created to address increasing telemarketing practices and their impact on consumers, has grown and continues to evolve on the heels of innovation. Make sure you’re starting the new year with real-time engagement and compliant communication with borrowers.

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November 15, 2022

What’s Your Plan for Foreclosure Prevention?

Don’t be deluded by ongoing reports of decreasing delinquency and foreclosure. As is often the case, it depends on which numbers you’re watching. Foreclosure starts continue to increase, along with early-stage delinquencies. You can make a direct impact on foreclosure avoidance with modern self-serve capabilities that assist your borrowers in understanding their options before they become seriously delinquent. Servicers need a preventative plan now – not later – to manage a servicing landscape that is filled with potential landmines.

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October 17, 2022

CFPB Proposes Automation To Reduce Consumer Friction

What does the CFPB’s recent initiative to curate mortgage products and assist homeowners have to do with mortgage servicing? More than you think. Part of a broader initiative, the Consumer Financial Protection Bureau is specifically looking for “public input on ways to support automatic short-term and long-term loss mitigation assistance for homeowners who experience financial disruption.” The mortgage market sits at an unusual precipice, teetering between historic highs and lows in every area, from origination to loss mitigation and foreclosure. Yet, what makes this season even more nuanced, is the pandemic impact that has propelled our industry forward, finally forcing us into the digital age. So now, before taking a pause, the CFPB has made the timely decision to capture industry information that could assist us in driving this momentum in automation and accelerating it.

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September 21, 2022

Can Servicers Rise to the Latest Challenges?

What’s next on the mortgage horizon? Lenders are feeling the pinch as interest rates make an uphill trek. On a broader scale, foreclosure activity has now surpassed pre-pandemic levels and continues to inch upward as average home equity has reached a record high. This is not doom and gloom, but certainly signals transformation is soon to come. Preparing for this next influx of change is going to be a challenge, especially for servicers, who will be impacted by cost-cutting measures as rising interest rates begin to affect the entire mortgage operation.

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August 22, 2022

Should Servicers Be Worried About the CFPB's Key Observations?

The industry is migrating from forbearance to foreclosure, and mortgage servicers are seeing another change in the makeup of their default servicing portfolios. Forbearance volume is plateauing as the number of loans entering forbearance more closely parallels the volume of forbearance exits. At the same time servicers are becoming anxious as foreclosure activities, from filings to auctions, increase month over month. This type of continued volatility in delinquency activity, whether it’s a change to overall volume, delinquency reasons, relief options, or regulatory requirements, creates severe risk for servicers.

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July 19, 2022

How Do Servicers Outpace Rising Foreclosure Activity With Mounting Oversight?

Have you seen the latest foreclosure stats? The picture they paint isn’t a pretty one. The June 2022 U.S. Foreclosure Market Report shows an increase of 219 percent for foreclosure starts over the past six months! Other foreclosure activities, including filings, default notices, auctions, and repossessions have increased by 153 percent compared to last year. We are fast approaching pre-COVID foreclosure levels. Although you may remember those numbers as industry lows, this is not the same economic or interest rate environment. Many consumers are only now beginning to recover from pandemic impact, but rising inflation is making it more and more difficult to transition to normalcy.

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