Mortgage servicers often must navigate a fluctuating regulatory environment that poses varying degrees of complexity and enforcement as economic circumstances and political administrations change. When unpredictable catastrophic events like the COVID-19 pandemic occur, a tidal wave of challenges can quickly disrupt the servicing industry – requiring swift action and adaptation to address the groundswell of issues that arise.
The COVID-19 pandemic has resulted in millions of Americans suddenly facing job losses and financial hardships, which directly impacts their ability to pay their mortgages. Mortgage servicers are faced with operational and regulatory compliance challenges to address the new and evolving COVID-19 forbearance and foreclosure moratorium requirements. They must address processing high volumes of borrower inquiries and forbearances, while also planning how to handle the loans after the forbearance period ends.
In turbulent times, the right servicing system can provide the operational agility servicers need to take care of their customers, communicate proactively, and address rapidly changing regulatory requirements, like the CARES Act, Equal Credit Opportunity Act, and the Fair Housing Act, among others.
An Evolving Regulatory Environment
Enacted in March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allows borrowers with federally backed loans to request an initial 180 days of forbearance and another 180 days once that period is over. The GSEs also require servicers to contact borrowers before the initial six months have expired to find out if forbearance-plan extensions or other options are needed.