After the housing crisis of 2008, the last thing Americans want to think about is foreclosures. However, foreclosures are a reality that cannot be ignored, especially in light of the current state of the U.S. economy. Black Knight’s loan level mortgage data for July 2022 showed both delinquencies and active foreclosures hovering close to record lows, and foreclosure start activity has remained far below pre-pandemic levels. While long-term delinquency forecasts are encouraging, it’s always in a mortgage servicer’s best interest to take a proactive approach to managing potential foreclosure volume.
Below are three steps that Black Knight suggests a servicer should consider to prepare for the unknown future of foreclosure activity.
Automation is Crucial
To take charge of your portfolio, and to be in line with investor requirements, a servicer must proactively monitor for changing loan statuses and the issuance of breach/demand letters. When a customer exits a forbearance plan, it may result in a loss mitigation opportunity or a pre-foreclosure review process.
This is a prime instance where technology can help a servicer with the heavy lifting by monitoring client-configured key criteria and providing alerts. If it’s time to initiate a process such as loss mitigation or foreclosure, technology can assist a servicer with meeting its compliance obligations by automating the numerous steps in such mortgage-related processes. For example, the Black Knight Actionable Intelligence PlatformSM includes a Breach and Foreclosure Eligibility tool that automates 55 key checks to assist servicers with meeting their compliance obligations.
Review of Current Processes
A servicer needs to be proactive by constantly analyzing existing processes and procedures for improvement opportunities. Is your servicing operation prepared to handle a potential increase in foreclosures? Does your organization have the technology in place to help it properly manage such activity in a timely and efficient manner, all the while focusing on mitigating risk? The CFPB requires mortgage servicers to take appropriate steps to prevent foreclosure, and without advanced technology solutions such as those offered by Black Knight, this can be a time-consuming and expensive manual commitment.
The Time to Plan is Now
Origination volumes are currently in a lull due to inflation and mortgage rates being at highs not seen for many years. As such, it’s the perfect time to strategically plan for the future. Implementing process improvements and eliminating operational inefficiencies now can pay off significantly when the market begins to settle, and origination volumes begin to increase. The current period of low origination activity provides an ideal opportunity to discover and implement technology solutions that can help your organization maximize its future goals and be better prepared to deal with the challenges presented by increased foreclosure activity.
Learn more about Black Knight’s solutions focused on foreclosure handling.