As we start to move beyond the COVID pandemic, some normalcy will return to the industry. However, federal law requires that lenders and servicers continue to take care in how they deal with and report on consumers who are still suffering from the crisis.
For instance, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, servicers may not report a mortgage borrower delinquent if the borrower’s account is in forbearance as a result of COVID-19. As we return to normal operating procedures, it will be very important to know for sure whether your borrower is still in forbearance or not.
In fact, at Xactus, we’re already fielding calls requesting this information. Fortunately, we can verify whether an account is in forbearance and provide the last date a mortgage payment was made by the borrower. This is often the result of manual work that may take slightly longer than some of our other offerings, but it is essential information for lenders and servicers.
According to the Mortgage Bankers Association, 2.5 million homeowners are still in forbearance plans, but that number is dropping. The MBA’s latest Forbearance and Call Volume Survey revealed that the total number of loans in forbearance decreased by 9 basis points from 5.05% of servicers’ portfolio volume in the prior week to 4.96% as of March 21, 2021.
This is good news as it signals a return to a pre-COVID world, but it also means that the next few months will offer more uncertainty to the industry as the consumer’s status in regard to forbearance may not be known. That uncertainty carries risk.
We encourage you to work with your compliance department to obtain guidance on the types of information that you can request from the consumer and what information you can report to the credit bureaus. And call on Xactus if you need verification of the status of your borrower.