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Borrower Retention During COVID-19

Borrower Retention During COVID-19

The economic impacts of COVID-19, combined with historically low interest rates, are leading to an accelerated turnover rate in homeownership tenure. Many borrowers are selling their homes sooner than planned in search of more affordable housing, or to live in less densely populated areas.

According to Black Knight data, 2020 has experienced a steady flow of purchase activity. Our research shows that $351 billion in purchase loans were originated during the second quarter of 2020, as low rates increased purchase demand.

Under the circumstances, mortgage servicers have a prime opportunity to improve retention today by securing the financing on their existing customers’ new homes. This can help offset the portfolio run-off due to refinance activity, which remains considerably high according to recent data.

Of course, to improve retention this way servicers must be able to identify customers who are “in the market.” But without easy access to the right type of data and analytics, finding those borrowers within a portfolio can be a difficult and time-consuming effort for servicers.

Black Knight has data assets that include property records representing 99.9% of the U.S. population and MLS data with national coverage. We have linked this data together with alerts of new property listings and with our top-rated AVM data in a new solution – Value Range Express. This powerful solution provides servicers with the information needed to quickly, easily and cost-effectively discover potential retention opportunities within their portfolio.

Value Range Express offers a unique combination of data and analytics to help servicers identify existing customers early on who have listed their properties. With this information, servicers can proactively provide pre-approved retention offers on subsequent property purchases to at-risk borrowers. The for-sale listings and property data in Value Range Express are refreshed daily to deliver currency and completeness, and the solution provides single-source access to over 200 fields of data.

Risk Mitigation

Value Range Express’ combination of MLS data, property records and AVM data lends itself to numerous other use cases. For example, to help with risk mitigation efforts, servicers can leverage the solution to quickly identify listed properties that are early in delinquency or unapproved short-sale listings. Identifying such activity early can help reduce the complexities of invalid and costly transactions.

In addition, the solution provides alerts for new and active rental listings, which could indicate potential rental income problems or an at-risk borrower relationship that is looking to purchase an investment property after the rental sale.

Portfolio risk managers and modelers need to continuously track and analyze key trends that could negatively impact loan portfolios. The data from Value Range Express helps them efficiently and effectively do this. Users can track trends such as valuations and pre-payments, as well as listing prices, properties’ days on market, foreclosures, short-sales, and so on.

Value Range Express can be accessed a variety of ways, including through a secured FTP site or our time-saving API. The solution can also be accessed directly in the Black Knight’s Rapid Analytics Platform℠ (RAP℠), an enterprise cloud-based data and analytics marketplace to execute queries, create advanced analytics and train machine-learning models to quickly deliver highly actionable insights.

With the financial impact from COVID-19 likely to continue, mortgage lenders and servicers need to proactively prepare for increased risk to their portfolios. Value Range Express offers a powerful, innovative one-stop solution to help clients improve retention and address many other business challenges.

Learn more about Value Range Express here.