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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to modernize mortgage default servicing processes by inviting more automation into the process and moving away from outdated face-to-face requirements.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.

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.

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.

Are you ready to put 2021 behind you? Mortgage servicers continue to try to keep up as their segment of the business is inundated by pandemic influence, shifting regulation, and industry digitization. Each of these areas can, and has, impeded a servicers’ ability to operate under the pressures of record-breaking volume, forcing the industry to lean toward a defensive or reactionary approach to business. It’s time to call on your best offensive strategies and accelerate into the New Year.